Credit Suisse fined $80M in dark pool trading charges

The Swiss bank Credit Suisse Group AG will have to shell out $80 million in fines and disgorgement to the US regulators in an alternative trading-related settlement case. Credit Suisse didn't reveal its operations in dark pool private share trading exchange to the clients.

To settle this allegation, the Swiss bank will be paying $50 million in fines and disgorgement to the US Securities and Exchange Commission (US SEC) and $30 million to New York Attorney General's office. There's no official information available from Credit Suisse in this regard. 

Providing an improper trading advantage to high-frequency traders is one of the allegations against Credit Suisse. The US Securities and Exchange Commission has been investigating into CrossFinder platform of Credit Suisse. 

The CrossFinder platform is the largest alternative trading system in the US. The US SEC is finding out whether the CrossFinder platform was giving undue advantage to high net worth investors. Anonymous trading venues are known as dark pools. The anonymity gives an added advantage to institutional investors to trade in large chunks of shares without the market moving against them.

Unlike normal stock market trading, there wouldn't be any information about supply and demand in shares trading on CrossFinder. The major investment banks that operate dark pool accounts would give only details of transactions. It's estimated that dark pool trading platform accounts for over 20 percent of $23-trillion trading in the US stock markets. 

Credit Suisse is the largest alternative trading platform in the American market. The Zurich-based bank's controversial role in misappropriating the accounts on its alternative trading platform is expected to reach a conclusion. Towards this an agreement will be signed, according to unconfirmed sources. 

Along with dwindling trading volumes on the US stock markets owing to the global economy slowdown and other developments in Europe and Asia, the trade lots in the dark pool are also showing southward movement. 
Credit Suisse is accused of not revealing the required information on how dark pool accounts are operated. The transactions on CrossFinder are kept in dark about the asset managers' investments. 

The New York Attorney General has earlier accused Barclays Plc for misleading clients in dark pool accounts. The Attorney General in June 2014 also filed a lawsuit against Barclays Plc. Barclays Plc is still fighting in the court. 

Another brokerage firm Investment Technology Group Inc was also subject to paying fines for alleged operations in the dark pool. Last August, the brokerage firm paid $20.3million to settle SEC charges over the secret trading desk for taking undue advantage in making profits from confidential customer information in the dark pool.

In an another case related to dark pool accounts, UBS Group AG in last January agreed to pay $14.4 mn to settle SEC charges. Stock exchanges and dark pool platforms enable high-frequency traders to get access to market data much ahead of other investors. This gives an unfair advantage in dark pool trading.