Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Regulation and Compliance > Federal Regulation > SEC

SEC Fines Bloomberg Tradebook $5M

By Jeff Berman

X
Your article was successfully shared with the contacts you provided.

Bloomberg Tradebook agreed to pay $5 million and be censured to settle charges by the Securities and Exchange Commission claiming the Bloomberg division made “material misstatements” and omitted “material facts” about how it handled certain customer trade orders, the regulator said Wednesday.

The SEC’s order found that Tradebook violated an antifraud provision of the securities laws. Without admitting or denying the findings in the SEC’s order, Tradebook agreed to the regulator’s sanctions, including the $5 million fine, the SEC said. That dollar amount reflected Tradebook’s significant cooperation with the SEC staff, the regulator said.

“We are pleased to have resolved this matter with the SEC, which pertains to a period during which Tradebook was operating as an executing broker for U.S. stocks,” a Bloomberg spokeswoman said Thursday.

“Unrelated to this matter, Tradebook ceased to operate as an executing broker in U.S. stocks in September 2018,” she pointed out, adding: “We remain focused on ensuring that our business maintains best practices and the highest standards to bring transparency and fairness to the markets.”

The SEC’s order found that Tradebook routed certain customer orders — mainly orders entered by customers who paid relatively low commission rates — using an undisclosed arrangement that the firm referred to internally as the “Low Cost Router.”

As part of that arrangement, Tradebook allowed three unaffiliated broker-dealers to determine the venues to which certain customer “immediate-or-cancel” orders would be routed for execution. Tradebook did not notify affected customers that a significant portion of their orders would be routed via an unaffiliated broker-dealer rather than Tradebook itself, the SEC said.

“In addition, Tradebook provided customers with information about the identity of the market centers where some of the orders placed through the Low Cost Router were executed that was unverified and, at times, without basis” in more than 1 million orders, according to the SEC’s order.

Between November 2010 and September 2018, about 6.4 million Tradebook customer orders were executed based on routing decisions made by those unaffiliated broker-dealers, according to the SEC. That practice contradicted Tradebook’s marketing materials, which claimed customer orders would be routed by Tradebook’s own “advanced” technology, based on factors including price and liquidity, the SEC said.

“Contrary to representations in its marketing materials, Tradebook let unaffiliated brokers make decisions about the routing of certain customer trade orders in a way that lowered Tradebook’s costs,” according to Joseph G. Sansone, chief of the SEC Enforcement Division’s Market Abuse Unit. “Broker-dealers must take care to provide customers with accurate and up to date information about important features of their order routing services,” he said in a statement.

— Check out Wunderlich Challenges FINRA Arb Award After Zoom Hearing on ThinkAdvisor.

Jeff Berman

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.