Tuesday, September 23, 2014

SEC Charges N.Y.-Based High Frequency Trading Firm With Violating Net Capital Rule For Broker-Dealers

The SEC charged a New York-based high frequency trading firm with violating the net capital rule that requires all broker-dealers to maintain minimum levels of net liquid assets or net capital.  The firm’s former chief operating officer is charged with causing the extensive violations.
An SEC investigation found that Latour Trading LLC operated without maintaining its required minimum net capital on 19 of 24 reporting dates during a two-year period, and the firm missed the mark by large amounts ranging from $2 million to $28 million.  During this period, Latour’s trading at times accounted for as much as 9 percent of the trading volume in equity securities for the entire U.S. market.  

To settle the SEC’s charges, Latour agreed to pay a $16 million penalty, the largest ever for violations of the net capital rule.  The previous high was $400,000 in an enforcement action in 2004.  Latour’s chief operating officer when the series of violations began agreed to pay a $150,000 penalty to settle the charges against him.
For more information visit the SEC website.
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