Credit Suisse Securities and Barclays Capital will pay a combined $154.3 million to settle SEC and New York state charges that they misled clients who traded on the firms' dark pools.
The Barclays penalty — $70 million — is the largest ever assessed against a dark-pool operator, said a news release Monday from New York Attorney General Eric Schneiderman.
Andrew Ceresney, director of the Securities and Exchange Commission's enforcement division, said in a separate news release that the fines were the “largest-ever penalties imposed in SEC cases involving two of the largest alternative trading systems.”
Credit Suisse will pay a combined $60 million — $30 million each to the SEC and the New York attorney general's office — as well as $24.3 million in disgorgement. Barclays will pay $35 million each to the SEC and the New York attorney general's office.
Among the charges, the SEC said Credit Suisse failed to treat subscriber order information on its Crossfinder dark pool confidentially and did not disclose to all subscribers that their confidential order information was being transmitted out of the dark pool to other Credit Suisse systems. It also did not notify subscribers that its order router systematically prioritized Crossfinder over other venues in certain stages of its routing process.
Barclays, according to the SEC, would move some of the most aggressive traders on its LX dark pool to its least aggressive trading categories. As a result, subscribers would trade with more aggressive counterparties even when they chose to block such trades.
In separate statements, Barclays and Credit Suisse said they were “pleased” to have reached an agreement with the SEC and the New York attorney general.
The penalties exceed the previous high of $18 million assessed to Investment Technology Group, which on Aug. 12 settled SEC charges that the dark-pool operator misused confidential trading information of its subscribers in a secret trading desk.