Barclays Capital, Credit Suisse Reach Settlements With Attorney General, SEC Over 'Dark Pools'
NEW YORK (CBSNewYork) -- Barclays Capital and Credit Suisse Securities have agreed to pay a combined $154.3 mllion to the state of New York and the U.S. Securities and Exchange Commission to settle charges that they violated federal securities laws in running their dark pools, private exchanges for trading huge blocks of securities.
According to state Attorney General Eric Schneiderman's office, Barclays admitted to core facts in Schneiderman's June 2014 complaint alleging misrepresentations about how it operated its dark pool, "Barclays LX."
"We're concerned about the investment of retirement savings and pension funds and the institutional investors that manage those were very much the targets of the misconduct in both Barclays and Credit Suisse dark pools," Schneiderman said.
Schneiderman said Barclays told big investors they would be shielded from predatory traders, adding, "In fact, Barclays gave high-frequency traders preferential treatment."
Barclays will pay $70 million and has agreed to install an independent monitor to ensure proper operation of its electronic trading division.
The attorney general said several former employees stepped forward to become whistle-blowers.
Credit Suisse will pay $84.3 million. Among the allegations against the company, Schneiderman said it mispresented its "alpha scoring" feature, which according to Credit Suisse's marketing, gave clients the ability to avoid trading with counterparties whose order flow the company considered "opportunistic" and detrimental to institutional investors. The company told clients the scoring was objective and transparent, but in reality it was tied to multiple subjective factors, the attorney general's office said.
