Investment Technology Group and subsidiary AlterNet Securities will pay a combined $12 million to the SEC to settle charges that the firms disclosed their clients' confidential dark pool trading information without their knowledge, the regulatory agency announced Wednesday.
According to the Securities and Exchange Commission's administrative order, ITG from 2010 to 2017 misstated and omitted details to its clients about the operation of its POSIT dark pool and did not set "adequate safeguards and procedures" to protect POSIT subscribers' confidential trading information.
"Contrary to assurances it made to dark pool subscribers, ITG failed to ensure that trading information was protected, and in some instances used this information to attempt to grow its business," said Joseph Sansone, chief of the SEC enforcement division's market abuse unit, in an accompanying news release.
ITG and AlterNet neither admitted or denied the SEC charges, the agency said.
An ITG spokesman cited an 8-K filing the company submitted to the SEC on Wednesday that said: "The order acknowledges ITG's cooperation and several of the company's most significant remedial actions, including enhanced compliance procedures, stricter limits on access to POSIT data, and additional training of employees concerning the handling of POSIT data. The company is not aware of any live order information or client identifying information having been shared outside of ITG."
The latest SEC charges are separate from charges filed in August 2015 against ITG that accused the dark pool operator of misusing subscribers' confidential trading information in a secret trading desk called Project Omega. ITG paid $20.3 million to settle those charges.
