The US Securities and Exchange Commission has fined electronic broker Instinet and the Inet ECN a total of $2.18 million for publishing inaccurate monthly execution reports.
Regulators require market operators to publish "Dash 5" reports every month that provide detailed information about the price and speed at which they execute orders.
In a statement, the SEC says from June 2001 to May 2004, Instinet and its Inet ECN repeatedly published reports that included inaccurate order execution quality information, including the misclassification of shares, miscounting of cancelled shares, improper exclusion of orders, improper calculations based on erroneous times and other errors.
The SEC says Instinet and Inet relied heavily on automated systems but did not adequately test their systems and did not respond effectively after NASD staff, SEC staff and third parties detected repeated errors in the execution reports.
Instinet and Inet have agreed to pay the civil penalties with the SEC and market regulator NASD without admitting or denying the charges.