Credit Suisse Securities (USA) LLC (CS) and Barclays Capital Inc. (BARC) will settle their respective cases brought against them by the U.S. Securities and Exchange Commission and the New York Attorney General. The firms are accused of violating federal securities laws will running dark pools. At issue is whether the banks disclosed enough information to clients about the trading that took place in their dark pools. <\/p>\n
Barclays will pay $35M to the SEC and $70M to the NY AG. It has admitted wrongdoing in the Commission\u2019s case. The bank had said that a Liquidity Profiling feature in its LX dark pool was going to \u201ccontinuously police\u201d the alternative trading system. The firm also stated that it would conduct weekly surveillance reports to look for order flow that was toxic. <\/p>\n
Instead, contends the SEC, Barclays did not continuously regulate the dark pool with the tools it promised it would use nor did it conduct the surveillance runs. The firm also failed to properly disclose that it occasionally overrode the Liquidity Profiling feature when it transferred subscribers from categories that were the most aggressive to the ones that were the least aggressive. Because of this, said the regulator, subscribers that chose to block trading with subscribers that were aggressive ended up dealing with them anyways. Barclays is also accused of misrepresenting the kinds and amounts of market data feeds that it utilized to determine the Best Bid and Offer in the dark pool. <\/p>\n
Meantime, Credit Suisse, which is not denying or admitting to the charges against it, will pay $84.3M I total\u2014$24.3M to the SEC as disgorgement and prejudgment interest, along with a $30M penalty, and $30M to the NY AG.<\/p>\n