Alternative Trading Systems Operator Liquidnet Charged with Violations of Market Access Rule and for Failing to Protect Confidential Subscriber Trading Information
summary
Liquidnet Inc. settled SEC charges for market access rule violations and failing to protect subscriber data by agreeing to a $5 million penalty and a censure.
paragraph
Liquidnet Inc. faced SEC charges for willful violations of the market access rule and failures in protecting confidential subscriber trading information. The broker-dealer set inappropriate credit thresholds, including a $1 billion default, and made material misrepresentations regarding its internal safeguards. To resolve these matters, Liquidnet agreed to a $5 million civil penalty and a censure without admitting or denying the findings.
narrative
The SEC announced settled charges against broker-dealer Liquidnet Inc. for violating market access rules, failing to protect confidential subscriber trading information, and making material misrepresentations. The investigation revealed that Liquidnet set inappropriate credit thresholds, such as a $1 billion default, and failed to adequately limit employee access to sensitive subscriber data. Additionally, the firm made material misrepresentations to both customers and subscribers regarding its market access controls and ATS safeguards. To resolve these charges, Liquidnet agreed to a censure and a $5 million civil penalty. While the settlement was reached without admitting or denying the findings, Liquidnet has undertaken remedial efforts, including hiring an outside consultant to improve its regulatory compliance. The firm is also required to submit specific reports and certifications to ensure adherence to market access and Regulation ATS requirements.
Classified broker-dealer-fraud(confidence 95%). EDGAR detection: forms Form D· recall 29% / precision 9%. detection rule →
Parties
confidential subscriber trading informationinappropriate credit thresholdsJoseph Sansonelindsay s. moilanenliquidnet inc.mandy sturmfelzrachael clarkeremedial effortssec investigationSecurities and Exchange Commissionsettled charges against liquidnet inc.
Keywords
market accessliquidnetmarkettrading informationaccessconfidential subscribersubscriber tradingtradingconfidentialsubscriberinformationorder findsatsorderalternative trading
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 2
- $1.00B $1 billion ≥$1B
- $5.00M $5 million $1M–$10M
Entities 11
- person confidential subscriber trading information
- person inappropriate credit thresholds
- person Joseph Sansone
- person lindsay s. moilanen
- company liquidnet inc.
- person mandy sturmfelz
- person rachael clarke
- person remedial efforts
- agency sec investigation
- agency Securities and Exchange Commission
- company settled charges against liquidnet inc.
Triples 15
- Securities And Exchange Commission announced settled charges against Liquidnet Inc.
- Liquidnet Inc. failed to have necessary controls and procedures regarding market access
- Liquidnet Inc. failed to protect confidential subscriber trading information
- Liquidnet Inc. agreed to pay $5 million civil penalty
- Liquidnet Inc. violated market access rule
- Liquidnet Inc. set inappropriate credit thresholds
- Liquidnet Inc. failed to adequately limit access to systems containing confidential subscriber trading information
- subject: made material misrepresentations to customers about its market access controls
- Joseph Sansone said ATS operators must have controls in place to mitigate risks
- Liquidnet Inc. agreed to be censured
- Liquidnet Inc. undertook remedial efforts
- Rachael Clarke conducted SEC investigation
- Mandy Sturmfelz conducted SEC investigation
- Lindsay S. Moilanen conducted SEC investigation
- Joseph Sansone supervised SEC investigation
PDF (from attached: pdf)
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Extracted body text (2,750c)
The Securities and Exchange Commission today announced settled charges against broker-dealer Liquidnet Inc., an operator of multiple alternative trading systems (ATSs), for failing to have necessary controls and procedures regarding market access, for failing to protect confidential subscriber trading information, and for related disclosure failures. Liquidnet agreed to pay a $5 million civil penalty to resolve the SEC's charges. As an ATS operator that provides market access to non-broker-dealers, Liquidnet is subject to the market access rule, which requires it to have a system of controls and procedures to prevent the entry of orders that would exceed appropriate credit thresholds for its customers. The SEC’s order finds that, for a number of years, Liquidnet violated the market access rule by, among other things, setting inappropriate credit thresholds, including having a default of $1 billion. In addition, to satisfy the applicable ATS exemption from having to register as an exchange, Liquidnet must comply with certain conditions, including having written safeguards and procedures to limit access to confidential subscriber trading information to certain employees of the ATS. According to the SEC’s order, for several years, Liquidnet failed to adequately limit access to systems containing confidential subscriber trading information and failed to make adequate related disclosures on certain forms. The SEC’s order finds that Liquidnet also made material misrepresentations to customers about its market access controls and to subscribers about its ATS safeguards for subscriber confidential trading information. “ATS operators account for a significant amount of liquidity in public markets and are part of the fabric of our market structure,” said Joseph Sansone, Chief of the Market Abuse Unit. “ATS operators must have controls in place to mitigate risks associated with their systems, such as market access and the potential exposure of confidential subscriber trading information in order to protect investors.” The SEC order finds that Liquidnet willfully violated the market access rule and other rules governing ATSs. Without admitting or denying the findings in the order, Liquidnet agreed to be censured and pay the $5 million penalty. The SEC's order also finds that Liquidnet undertook remedial efforts, including retaining an outside consultant to correct and improve its controls and procedures related to the market access rule and Regulation ATS. Liquidnet has undertaken to submit certain reports and certifications in connection with those efforts. The SEC’s investigation was conducted by Rachael Clarke, Mandy Sturmfelz, and Lindsay S. Moilanen of the Market Abuse Unit and was supervised by Mr. Sansone.
OCR text (2,750c · html-text · 99% conf)
The Securities and Exchange Commission today announced settled charges against broker-dealer Liquidnet Inc., an operator of multiple alternative trading systems (ATSs), for failing to have necessary controls and procedures regarding market access, for failing to protect confidential subscriber trading information, and for related disclosure failures. Liquidnet agreed to pay a $5 million civil penalty to resolve the SEC's charges. As an ATS operator that provides market access to non-broker-dealers, Liquidnet is subject to the market access rule, which requires it to have a system of controls and procedures to prevent the entry of orders that would exceed appropriate credit thresholds for its customers. The SEC’s order finds that, for a number of years, Liquidnet violated the market access rule by, among other things, setting inappropriate credit thresholds, including having a default of $1 billion. In addition, to satisfy the applicable ATS exemption from having to register as an exchange, Liquidnet must comply with certain conditions, including having written safeguards and procedures to limit access to confidential subscriber trading information to certain employees of the ATS. According to the SEC’s order, for several years, Liquidnet failed to adequately limit access to systems containing confidential subscriber trading information and failed to make adequate related disclosures on certain forms. The SEC’s order finds that Liquidnet also made material misrepresentations to customers about its market access controls and to subscribers about its ATS safeguards for subscriber confidential trading information. “ATS operators account for a significant amount of liquidity in public markets and are part of the fabric of our market structure,” said Joseph Sansone, Chief of the Market Abuse Unit. “ATS operators must have controls in place to mitigate risks associated with their systems, such as market access and the potential exposure of confidential subscriber trading information in order to protect investors.” The SEC order finds that Liquidnet willfully violated the market access rule and other rules governing ATSs. Without admitting or denying the findings in the order, Liquidnet agreed to be censured and pay the $5 million penalty. The SEC's order also finds that Liquidnet undertook remedial efforts, including retaining an outside consultant to correct and improve its controls and procedures related to the market access rule and Regulation ATS. Liquidnet has undertaken to submit certain reports and certifications in connection with those efforts. The SEC’s investigation was conducted by Rachael Clarke, Mandy Sturmfelz, and Lindsay S. Moilanen of the Market Abuse Unit and was supervised by Mr. Sansone.