Last week, state Attorney General Eric Schneiderman announced that that Barclays Capital and Credit Suisse Securities will pay a combined $154.3 million to New York State and to the Securities and Exchange Commission (SEC) to settle investigations into false statements and omissions made in connection with the marketing of their respective ‘dark pools’ and other high-speed electronic equities trading services. Dark pools are private exchanges for trading securities that are not viewable by the general public and are completed outside of public stock exchanges.
Barclays will admit that it misled customers and violated securities laws. It will pay $70 million, and has agreed to appoint an independent monitor for its electronic trading operations. Credit Suisse Securities will pay $60 million, and will pay $24.3 million in disgorgement and interest to the SEC over other trading violations.
Attorney General Schneiderman said:
“These cases mark the first major victory in the fight to combat fraud in dark pool trading and bring meaningful reforms to protect investors from predatory, high-frequency traders. This effort, which began when we first sued Barclays, includes coordinated and aggressive government action which forced admissions of wrongdoing and record fines. We will continue to take the fight to those who aim to rig the system and those who look the other way.”
Attorney General Schneiderman has called for greater regulatory oversight and market reforms to eliminate unfair advantages provided to high-frequency traders at trading venues.