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ARTICLE · 02 OCTOBER 2015

Coding Errors Lead To SEC Sanctions For High-Frequency Trading Firm

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These noncompliant orders involved more than $4.6 billion shares and had a notional value of $116 billion.

United StatesCorporate/Commercial Law
Harry Frischer
Harry Frischer
Brian Friedman
Brian Friedman
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Mistakes in computer coding by a high frequency trading firm that went undetected for approximately four years were responsible for approximately 12.6 million orders that violated Reg NMS, according to an Order settling an enforcement proceeding with Latour Trading LLC, announced by the SEC on September 30. These noncompliant orders involved more than $4.6 billion shares and had a notional value of $116 billion.

Once again, firms are reminded of the need to have robust controls over their complex computer systems, the need to educate and train IT staff on regulatory compliance issues, and the potential for large-scale violations resulting from computer errors, particularly errors in high frequency, high volume trading systems.

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