SEC Charges UBS Subsidiary With Disclosure Violations, Regulatory Failures in Operating Dark Pool

The SEC has started off 2015 with two hard-hitting and ground-breaking enforcement actions. First, the largest penalty in history against a financial exchange in the action against Direct Edge. That one was the result of our whistleblower client Haim Bodek’s multi-year efforts to expose an egregious rigging of the market. Now, the SEC comes with the largest penalty in history against a “dark pool” (or alternative trading system), resolved against UBS Securities, also for unlawful order type features and improper selective disclosure. Stay tuned for more to come. — Shayne Stevenson

"UBS Securities LLC agreed to settle charges by paying more than $14.4 million, including a $12 million penalty that is the SEC’s largest against an alternative trading system (ATS) or "dark pool." An SEC examination and investigation of UBS revealed that the firm failed to properly disclose to all subscribers the existence of an order type that it pitched almost exclusively to market makers and high-frequency trading firms. The order type, called PrimaryPegPlus (PPP), enabled certain subscribers to buy and sell securities by placing orders priced in increments of less than one cent. UBS was prohibited under Regulation NMS from accepting orders at those prices. " Full article »