The New York Attorney General and Securities & Exchange Commission have entered into discussions with Credit Suisse and Barclays to settle investigations into improper conduct in the operation of their dark pools.
Dark pools are private trading platforms allowing buyers and sellers to engage in transactions with greater privacy than in typical transactions on the stock market. They are believed to account for nearly 40% of all stock trading.
Credit Suisse is expected to pay an amount believed to be between $50 million and $100 million. The Wall Street Journal didn’t put a number on the CS penalty but suggests that it would be in the high tens of millions of dollars, which suggests more than $50 million.
Credit Suisse operates CrossFinder, the largest dark pool in the United States. It is accused of inadequately disclosing how the dark pool worked and providing an unfair advantage to some traders.
Barclays is expected to pay a large fine as well. The NY AG already has on ongoing lawsuit against the investment bank accusing it of lying to clients about the use of high speed trading in its dark pool.
These settlements are expected to be bigger than any of the previous cases in this area. UBS Group agreed to pay $14 million in January to settle the SEC investigation into its conduct. Investment Technology Group announced last month that it had set aside $20.3 million to settle SEC allegations against it for its dark pool.