The platform operator's founder and CEO, Fred Federspiel, and its chairman and former chief executive, Alfred Berkeley, will also both pay $100,000. The SEC findings were neither admitted nor denied by any of the parties.

Pipeline described its trading platform as a "crossing network" that matched orders with those from other customers, providing "natural liquidity."

These claims were "false and misleading", alleges the SEC, because Pipeline's parent company owned a trading entity that filled the "vast majority of customer orders". The affiliate, most recently known as Milstream Strategy Group, sought to predict the trading intentions of the dark pool's customers and trade elsewhere in the same direction before filling their orders on Pipeline's platform.

This meant that Pipeline generally did not provide the "natural liquidity" it advertised.

The regulator also found that, although Pipeline claimed that all users were treated the same, it provided Milstream with advantages, including special access to certain information about the operations of the dark pool and to data connections that made it easier to track history and activity.

In addition, Pipeline failed to adequately protect customers' confidential trading information, allowing the research director at its parent company, who acted as the manager for the affiliated entity from 2004 to 2006, access to it.

Robert Khuzami, director, enforcement division, SEC, says: "However orders are placed and executed, be it on an exchange floor or in an automated venue, whether dark or displayed, one principle remains fundamental - investors are entitled to accurate information as to how their trades are executed. Pipeline and its senior executives are being held to account because they misled their customers about how Pipeline's dark pool really worked."