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ITG Reserves $20.3 million for Probable Settlement with SEC, CEO Takes Full Reponsibility over Dark Pool Penalty

Jul 30, 2015 01:59 PM EDT | By Jean-Claude Arnobit

The SEC is investigating ITG for the test program that AlterNet Securities, Inc. one  of ITG's subsidiary, ran in 2010 to mid-2011.

The investigation is looking into the involved unit's trading activity, where information unavailable to other customers of ITG, is used in executing trades.

"These violations principally involved information breaches for a period of several months in 2010 regarding sell-side parent orders flowing into ITG's algorithms and executions by all customers in non-POSIT markets that were not otherwise available to ITG clients," the company said in the press release.

In light of the investigation, ITG is negotiating with the SEC for a potential settlement.

The $20.3 million settlement would cover the civil penalty of $18 million, disgorgement of trading revenues, that amounts to approximately $2.1 million, and prejudgment interest of approximately $250,000, according to the press release.

Bloomberg reports that ITG Chief Executive Officer Bob Gasser, in a note to clients, takes responsibility for what happened.

"As CEO of ITG, I apologize to our clients, our investors, and our employees. I take full responsibility for these historical mistakes," he said. "We have learned from this unfortunate experience and continue to apply those lessons to our business every day."

Bloomberg adds that Gasser said the firm has shut down the trading experiment and hasn't run a similar one ever since.

Authorities have increased its activity against alternative trading systems such as the dark pool.

Last January, UBS agreed to pay a settlement fine of $14.4 million for its own regulatory failures in its dark pool, Reuters reports.

Bloomberg adds that Barclays Plc is also facing a lawsuit from the New York attorney general's office.

Reuters adds that the fine the SEC handed out to ITG will be a record amount for  a company in the stock trading platform operation.

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