25 June 2017
download the report now

Liquidnet fined $2m for misusing dark pool subscriber data

09 June 2014  |  5736 views  |  1 STOP

Dark pool operator Liquidnet has agreed to pay $2 million to settle SEC charges that it improperly used confidential trading data from its subscribers.

Liquidnet violated its regulatory obligations and its own promises to its ATS subscribers for three years by giving a unit outside the dark pool operation access to the data, an SEC investigation found.

The firm promised its dark pool subscribers that it would keep their trading information confidential and allow them to trade with maximum anonymity and minimum information leakage.

Yet staffers at Liquidnet's equity capital markets (ECM) desk were given data that they then used during marketing presentations and communications to other customers and in two ATS sales tools.

For example, ECM employees would provide issuers with descriptions - including geographic locations, assets under management, and investment styles - of ATS subscribers who had recently indicated interest in buying or selling shares of issuers' stock.

ECM employees also used dark pool subscribers' trading data to advise issuers about which institutional investors they should meet during investor conferences and when clients should execute transactions in the ATS given the liquidity in the dark pool.

Daniel Hawke, chief, market abuse unit, enforcement division, SEC, says: "Liquidnet's subscribers trusted and believed that the firm was safeguarding their confidential information. Instead, the firm breached its assurances of confidentiality and anonymity to them by allowing its ECM employees to improperly access subscriber trading data."

Last week SEC chair Mary Jo White laid out her plans to improve oversight of dark pools, which now account for around 35% of US trading volume. She wants to increase the amount of information the SEC gets from these venues and is even considering making that data public to help investors track what their brokers are doing.

Comments: (1)

Neil Crammond
Neil Crammond - trader - london | 09 June, 2014, 11:42

question being that liquidnet were allowed to do this for 3 years ?

 SADLY OUR EXCHANGES ARE GUILTY OF PROVIDING FAIR AND ORDERLY MARKETS 

1 thumb up! 1 thumb up! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

SEC chair sets out HFT and dark pool proposals

SEC chair sets out HFT and dark pool proposals

06 June 2014  |  5619 views  |  0 comments | 5 tweets | 1 linkedin
Liquidnet moves into fixed income market through Vega-Chi acquisition

Liquidnet moves into fixed income market through Vega-Chi acquisition

18 March 2014  |  4260 views  |  0 comments | 6 tweets | 3 linkedin
Investors express alarm over caps on dark pool trading

Investors express alarm over caps on dark pool trading

28 November 2013  |  4027 views  |  0 comments | 5 tweets
Dark pool trading costing US investors billions - study

Dark pool trading costing US investors billions - study

07 June 2013  |  6290 views  |  0 comments | 11 tweets | 6 linkedin
Wedbush Securities sues Liquidnet over trade secrets

Wedbush Securities sues Liquidnet over trade secrets

21 October 2011  |  4849 views  |  0 comments
Liquidnet patent suit against ITG dismissed

Liquidnet patent suit against ITG dismissed

06 January 2011  |  7579 views  |  0 comments
Liquidnet postpones IPO

Liquidnet postpones IPO

02 December 2008  |  7329 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit vasco.com/news/PSD2-compliant-solutionsvisit www.www.fisglobal.comvisit www.finastra.com

Top topics

Most viewed Most shared
Live: EBAday 2017, day twoLive: EBAday 2017, day two
9825 views comments | 4 tweets | 5 linkedin
Worldpay pilots app-only mPOS for small retailersWorldpay pilots app-only mPOS for small re...
9309 views comments | 20 tweets | 27 linkedin
Live: EBAday 2017, day oneLive: EBAday 2017, day one
8963 views comments | 3 tweets | 4 linkedin
UK banks will need to change one million sort codes under ring-fencing rulesUK banks will need to change one million s...
8370 views comments | 8 tweets | 25 linkedin
What Banks and their customers can expect for the futureWhat Banks and their customers can expect...
7494 views comments | 7 tweets | 10 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job