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ARTICLE · 13 AUGUST 2015

SEC Sanctions Dark Pool Operator And Affiliated High Frequency Trader

Proskauer Rose LLP
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In the latest round of regulatory action involving high frequency trading and dark pools, the SEC announced yesterday that it reached a settlement with ITG, Inc., and its affiliate Alternet Securities, Inc.

United StatesCorporate/Commercial Law
Harry Frischer
Harry Frischer
Brian Friedman
Brian Friedman
Alyse Stach
Alyse Stach
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In the latest round of regulatory action involving high frequency trading and dark pools, the SEC announced yesterday that it reached a settlement with ITG, Inc., and its affiliate Alternet Securities, Inc., imposing a $20.3 million sanction based on ITG's misuse of confidential order information to benefit the firm's proprietary high-frequency trading.

The SEC's Order states that ITG historically marketed itself as an "agency-only" brokerage firm that did not engage in proprietary trading for its own account. ITG customers included "buy-side" customers, such as investment advisors, asset managers, pension funds and hedge funds, and "sell-side" customers, principally broker-dealers. In addition, ITG operated POSIT, an alternative trading system (often referred to as a "dark pool") that anonymously matched and executed orders received from ITG customers and other POSIT subscribers.

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