Record Dark Pool Settlements Reached between SEC, NY and Barclays, Credit Suisse

The U.S Securities and Exchange Commission and the New York State Attorney General have resolved investigations into wrongdoing by Barclays and Credit Suisse in the operation of their dark pools. Credit Suisse agreed to pay $84.3 million to the U.S. and New York concerning . Barclays agreed to pay $70 million to end the investigations.

Barclays was accused of failing to police its dark pool for predatory trading as promised to traders, misrepresenting information about its use of market data feeds to calculate the National Best Bid and Offer, and failing to disclose that traders who wished to not trade with aggressive subscribers to the dark pool might nevertheless trade with them due to overrides in the system. Barclays paid $35 million each to the SEC and New York State. It admitted it violated securities laws and agreed to an independent monitor of its dark pool.

Credit Suisse was investigated for misrepresentations and failures to disclose information concerning its alternative trading platforms, including both a dark pool (Crossfinder) and its “Light Pool” electronic communications network. The SEC identified its failure to treat order information confidentially, failure to inform subscribers it prioritized its dark pool over other venues at certain stages, and failed to disclose it alerted two high frequency trading firms concerning orders. Credit Suisse also

In addition to the $60 million fine paid by Credit Suisse for the above conduct, it also agreed to pay disgorgement of $24.3 million for the execution of sub-penny orders. Credit Suisse neither admitted nor denied the allegations.

This settlement has been expected for some time now. The SEC went after a number of investment banks and platforms last year for the operation of dark pools and the disclosures made concerning them to the subscribers of the platforms. The investigations which were concluded over the weekend were the two largest investigations that had been revealed publicly.