Investment Technology Group agreed to pay $24 million to settle SEC charges that it facilitated trades in American depository receipts without having the underlying foreign securities.
The Securities and Exchange Commission said ITG from 2011 to 2014 facilitated transactions known as “prereleases” of ADRs to its counterparties without owning the foreign shares “or taking the necessary steps to ensure they were (in custody of) the counterparty on whose behalf they were being obtained,” according to an SEC news release
“ITG's failure to properly supervise its securities lending desk caused ADRs to be issued that were not backed by actual shares, leaving them ripe for potential market abuse,” said Andrew M. Calamari, director of the SEC's New York regional office.
Responding to a request to ITG for comment, spokesman J.T. Farley cited a comment by ITG CEO Frank Troise during a Nov. 9 conference call on the firm's third-quarter results: “We want to put this legacy matter behind us,” Mr. Troise said at the time. “Additionally, we're committed to pressing forward with our strategic operating plan and we've made a number of enhancements to our risk and controls and governance environment.”
ITG, a broker and dark-pool operator, in 2015 agreed to pay $20.3 million to settle SEC charges that it misused confidential trading information of its subscribers in a secret trading desk.