Investment Technology Group agreed to pay $20.3 million to settle SEC charges that the dark-pool operator misused confidential trading information of its subscribers in a secret trading desk.
The settlement includes an $18 million penalty that is the Securities and Exchange Commission's largest ever against an automated trading system operator, the agency said in a news release issued Wednesday.
ITG through its affiliate, AlterNet Securities, ran the secret desk, called Project Omega, which accessed live feeds of trade order and execution information from ITG subscribers, the SEC said. It used that information in high-frequency trading strategies, including one that trades against subscribers of ITG's POSIT dark pool, the agency said.
Project Omega accessed the information from April to December 2010, the SEC said.
ITG in a separate news release admitted wrongdoing. R. Jarrett Lilien, interim CEO, said in the news release that the settlement provides ITG with a chance to “restore the bond of trust with our clients.”
Mr. Lilien was named interim CEO on Aug. 3, replacing Robert Gasser, who sources familiar with the company said left because of the Project Omega scandal. ITG will search for a permanent replacement.
The SEC also said the investigation into Project Omega is continuing, but the agency provided no details. ITG in a note to clients said the continuing SEC investigation “does not involve ITG or its current employees.”