European bigwig banks Barclays and Credit Suisse reportedly will settle federal and state charges placed by the U.S. Securities and Exchange Commission and the New York State general attorney over "dark pool" allegations. Reports surfaced Jan. 31, Sunday, based on statements made by the said U.S. authorities. The settlements may be the largest fines -- totaling $154.3 million for the two banks combined -- for this type of case.
British bank Barclays and Swiss bank Credit Suisse were accused of misleading investors in the dark pools, promising but these clients protection from high-frequency trading schemes but failing to deliver, Reuters reported. The trading system differs from public stock exchanges in that trading prices in dark pools are not disclosed until the deal is done.
Barclays reportedly will pay $70 million, half of which will be to the SEC and the other half will be to the New York State. The settlement included the bank's admission of unlawful act and a promise to place an independent monitor that will check that Barclays LX will follow state rules and regulations.
Credit Suisse will pay $30 million to the SEC, $30 million to the New York state, and another $24.3 million to the SEC for dealing with 117 illegal sub-penny orders from its dark pool venue Crossfinder. The settlement included that the bank will not make a denial or an admission of the regulators' accusations.
"These cases mark the first major victory in the fight to combat fraud in dark pool trading," New York Attorney General Eric Schneiderman via an emailed statement. "We will continue to take the fight to those who aim to rig the system and those who look the other way," she added, as reported by ABC News.
SEC Enforcement Chief Andrew Ceresney was cited in a separate statement saying that the fines the banks will pay show that "firms pay a steep price when they mislead subscribers," the Wall Street Journal also noted.
A spokeswoman from Credit Suisse said that the company is pleased to have the matter resolved, Reuters noted. A Barclays representative, however, did not provide any statements on the issue.
