Bloomberg.com reports that according to someone familiar with the matter, Credit Suisse Group AG (CS) will pay over $80 million to resolve federal and state authorities’ claims that it failed to fully disclose information to clients about how it ran its dark pool. Over $50 million of the payment is expected to take the forms of fines and disgorgement in a settlement with the SEC, while about $30 million would resolve the allegations made by the New York Attorney General.
Credit Suisse’s dark pool, Crossfinder, is the biggest alternative trading system in the country. The source said that the Swiss bank is accused of misrepresenting certain aspects about the way it runs the platform.
In dark pools, demand and supply remain private. Only specifics about executed trades are disclosed. Dark pools comprise one-fifth of trading in the U.S. stock market. Large investors, high frequency traders, and hedge funds are among those that trade on these alternative trading systems. There is concern that some traders are able to exploit and profit, sometimes with the help of dark pool operators. Meantime, ordinary investors may be suffering because of their inability to avail of such benefits.
New York Attorney General Eric Schneiderman has been looking into dark pools to find out whether they give high frequency traders an unfair advantage. His office sued Barclays Plc (BARC) last year for allegedly lying to customers about the activities of high-frequency trading firms within its alternative trading system platform.
The SEC, which has also been investigating dark pools, is probing Barclays, too. In August, Investment Technology Group Inc. agreed to pay the regulator $20.3 million to settle allegations that while running its proprietary trading desk, it used what it knew about customer requests to trade to its advantage. Earlier this year, UBS Group (UBS) agreed to pay $14.4 million to settle the SEC case alleging that the bank did not provide sufficient disclosures about the way it ran its dark pool. The firm settled without denying or admitting to the SEC charges. UBS’ dark pool is the UBS ATS.
Regulators have been upping their attempts to police dark pools. However, reports The Wall Street Journal, for some asset managers, these efforts are not fast enough and they have joined forces to come up with industry standards and pressure policy makers to do more to protect investors. The group, called Healthy Markets, is seeking to provide analysis and data to investors and serve as a “public voice.” To date, Healthy Markets is comprised of five fund management companies, including Brandes Investment partners, Janus Group, Boston Company Asset management, Southeastern Asset Management, and Quantitative Investment Management.
At The SSEK Partners Group our dark pool fraud law firm represents investors seeking to recover their losses. It is important that you are represented by an experienced securities lawyer. Having legal representation increases your chances of recovery. Our securities fraud lawyers has helped thousands recoup their lost investments.
Credit Suisse Said Nearing $80 Million Dark Pool Settlement, Bloomberg, September 14, 2015
Asset Managers Team Up to Develop Standards for Dark Pools, The Wall Street Journal, September 15, 2015
Schneiderman eyes ‘dark pool’ settlement with Credit Suisse, NY Post, July 28, 2015