SEC charges two firms with regulatory violations

The Securities and Exchange Commission is continuing its push to tackle market access issues, filing suits against a “dark pool” operator and a major trading firm.

The SEC announced Friday that it had charged the New York-based Liquidnet for improperly using confidential trading data from clients to market its services. The firm agreed to pay $2 million to settle the charges with admitting or denying guilt.

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Dark pools are private trading venues that operate away from traditional stock exchanges, and offer limited information about who is trading or what they’re trading.

The regulator also announced Friday that it had charged Wedbush Securities, one of the top five largest trading firms on the NASDAQ, with failing to follow several market access rules, allowing direct access to trading exchanges to people who had not been properly vetted by the firm. The regulator also charged the firm failed to meet rules pertaining to anti-money laundering requirements and record retention.

That case is heading to court, where a judge will determine if the violations hold merit and what, if any, sanctions to impose.

The charges came one day after SEC Chairwoman Mary Jo White laid out a broad new effort by the regulator to get a better handle on how markets operate in the high-tech world of high-frequency trading. White said in a speech that she wants the regulator to take on a host of new projects aimed squarely at watching high-speed traders more closely, and determining whether the hunt for millisecond advantages presents any issues for the markets as a whole.

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