Broker-Dealer Settles SEC Charges for Failure to Protect Subscribers' Confidential Information

A broker-dealer that operates an alternative trading system ("ATS") for trading fixed income securities settled SEC charges for failing to protect subscribers' confidential information.

According to the SEC, the broker-dealer marketed itself as an anonymous trading platform and assured its subscribers that their identities would be kept confidential. The SEC alleged that over the course of a two-year period, the broker-dealer improperly disclosed the identities of certain ATS subscribers to potential counterparties over 2,500 times. In addition, the firm failed to amend its Form ATS to indicate that the ATS was not operating as an anonymous platform.

To settle the charges, the broker-dealer agreed (i) to an entry of the SEC's order that it violated Regulation ATS Rules 301(b)(10) and 301(b)(2), (ii) to cease and desist from further violations, (iii) to a censure and (iv) to pay a civil money penalty of $2.1 million.