‘Dark pool’ broker Liquidnet paying $2M to settle SEC charges on use of customer trading data

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WASHINGTON – A brokerage firm that operates a so-called “dark pool” trading system has agreed to pay $2 million to settle federal civil charges of using customers’ confidential trading data to market its services.

The settlement between Liquidnet Inc. and the Securities and Exchange Commission was announced Friday, a day after SEC Chair Mary Jo White proposed new rules that could bring closer oversight of high-speed trading and dark trading pools, which account for as much as 35 per cent of trades.

Unlike public stock exchanges, dark pools are private, off-market platforms that offer limited information about participants or operations.

The SEC said that Liquidnet improperly gave access to confidential trading information to a brokerage unit outside its dark pool.

New York-based Liquidnet neither admitted nor denied wrongdoing under the settlement.

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