NEW YORK (Reuters) - Agency brokerage Investment Technology Group Inc (ITG.N) said on Wednesday it had set aside $12 million for a probable settlement related to a regulatory probe into its U.S. “dark pool,” or private stock trading venue.
The settlement would be the company’s second in recent years with the U.S. Securities and Exchange Commission involving its U.S. POSIT dark pool, following a $20.3 million charge in August 2015.
Dark pools allow institutional investors to anonymously trade large blocks of shares without the market moving against them. Over the years the trading venues have evolved to cater to other types of investors and regulatory scrutiny has increased as volumes have grown.
The current SEC probe into ITG is focused on several alleged regulatory violations related to disclosures on how its dark pool operated, the underlying technology, and how its data was used, the New York-based company said in a statement.
The alleged violations occurred over various periods, the longest ranging from June 2009 to November 2017, ITG said.
In one case, the probe focused on technology that affected the ability mainly of high-speed traders to interact with investor orders in the dark pool. In another, it looked at how anonymized data was shared internally and with algorithmic trading clients, ITG said.
“ITG has taken meaningful remedial actions during the course of the SEC’s investigation, including imposing additional limitations on access to U.S. POSIT data as well as enhancing” disclosures, ITG said.
The allegations do not involve proprietary trading or other regional ITG trading venues or businesses, the company said.
In August 2015, ITG admitted to having run a secret trading desk that profited off of confidential customer information within its U.S. dark pool. (reut.rs/1EmZEW8)
ITG fired its former chief executive, Bob Gasser, over the matter. Chairman Maureen O'Hara stepped down shortly after that following pressure from activist shareholders. (reut.rs/1X3auct)
Reporting by John McCrank; Editing by Richard Chang