According to
AVAGO specification SFP module asserts TX_Fault with "1A" hex data at the byte 65. This could happens due to next reasons:
TX_FAULT
A laser fault or a low VCC condition will activate the transmitter fault signal, TX_FAULT, and disable the laser. A low signal indicates normal laser operation and a high signal indicates a fault.
Eye Safety Circuit
Under normal operating conditions, the laser power will be maintained below the eye-safety limit. If the eye safety limit is exceeded at any time, a laser fault will occur and the TX_FAULT output will be activated.
So there is no restriction to use this module from switch side.
Try to use another SFP as this module could be deffective.