SEC Charges HFT Firm with Violating Net Capital Rule

The SEC charged a high-frequency trading ("HFT") firm with violating the net capital rule that requires all broker-dealers to maintain minimum levels of net liquid assets or net capital.

According to the Order, the SEC found that Latour Trading ("Latour") repeatedly miscalculated its net capital amounts in 2010 and 2011 by failing to make proper haircut deductions from the market value of its proprietary securities positions and other positions. The SEC alleged that Latour operated without maintaining its required minimum net capital on 19 of 24 reporting dates during a two-year period. During this period, Latour's trading accounted for as much as nine percent of the trading volume in equity securities for the entire U.S. market.

See: SEC Order.