Barclays, Credit Suisse Settle Dark Pool Charges

     (CN) – Barclays and Credit Suisse will pay the SEC more than $150 million to settle accusations of “dark pool” securities violations, the agency said.
     Dark pools are alternative trading systems to the major stock exchanges that let buyers and sellers trade without displaying prices to the public.
     Barclays Capital will pay $35 million each to the U.S. Securities and Exchange Commission and New York Attorney General, while Credit Suisse Securities will pay $30 million to each regulator and disgorge $24.3 million.
     The fines are the largest penalties ever imposed for dark pool-related securities violations, the SEC said.
     Barclays admitted wrongdoing, while Credit Suisee did not admit or deny its wrongdoing.
     “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,” Andrew Ceresney, director of the SEC’s Enforcement Division, said in a statement.
     Barclays supposedly told investors it would run surveillance reports to police its dark pool for predatory trading, but in fact did not run the promised reports. It also misrepresented the type and number of market data feeds it used to calculate bids, according to the SEC.
     Similarly, Credit Suisse allegedly told investors it would use a feature to identify “opportunistic” traders and kick them out of its pool, but the feature was not online for the first year of the pool’s operation and traders labeled “opportunistic” could continue to trade under other system IDs.
     Last year, the SEC fined UBS Securities $14.4 million to settle charges related to its dark pool. The agency said the bank failed to disclose to all subscribers the existence of an order type that it pitched almost exclusively to high-frequency trading firms.

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