The U.S. Securities and Exchange Commission (SEC) recently announced that Barclays Capital and Credit Suisse Securities (USA) have agreed to settle separate cases finding that they violated federal securities laws while operating alternative trading systems (ATS) known as dark pools and Credit Suisse’s Light Pool.
Barclays agreed to settle the charges by admitting wrongdoing and paying $35 million penalties to the SEC and the New York Attorney General for a total of $70 million. Essentially, Barclays misrepresented its efforts to police its dark pool, overrode its surveillance tool and misled its subscribers about data feeds at the very time that data feeds were an intense topic of interest.
Credit Suisse agreed to settle the charges by paying a $30 million penalty to the SEC, a $30 million penalty to the New York Attorney General and $24.3 million in disgorgement and prejudgment interest to the SEC for a total of $84.3 million. Basically, two Credit Suisse ATSs failed to operate as advertised and failed to comply with numerous regulatory requirements over a multiyear period.
SEC Chair Mary Jo White commented:
These cases are the most recent in a series of strong SEC enforcement actions involving dark pools and other alternative trading systems. The SEC will continue to shed light on dark pools to better protect investors.
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Andrew Ceresney, director of the SEC’s Enforcement Division, added:
Dark pools have a significant role in today’s equity marketplace, and the firms that run these venues must ensure that they do not make misstatements to subscribers about their material operations. These largest-ever penalties imposed in SEC cases involving two of the largest ATSs show that firms pay a steep price when they mislead subscribers.
The New York Attorney General’s office is announcing parallel actions against the two firms.
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