NYSE Settles SEC Charges for $4.5 Million

The U.S. Securities and Exchange Commission (SEC) has settled charges with the New York Stock Exchange (NYSE), along with two affiliated exchanges, NYSE ARCA and NYSE MKT, and the exchanges’ affiliated routing broker Archipelago Securities for engaging in practices that violated SEC-approved exchange rules or required a rule where the exchanges did not have one in effect.
By Jake Safane(2147484770)
The U.S. Securities and Exchange Commission (SEC) has settled charges with the New York Stock Exchange (NYSE), along with two affiliated exchanges, NYSE ARCA and NYSE MKT, and the exchanges’ affiliated routing broker Archipelago Securities for engaging in practices that violated SEC-approved exchange rules or required a rule where the exchanges did not have one in effect.

The exchanges and broker paid a combined $4.5 million penalty to settle the case. In doing, so they neither confirmed nor denied the findings, but the NYSE exchanges did agree to retain an independent consultant to review their policies and procedures for determining whether their practices are in line with existing rules, or need SEC approval for a new or amended rule.

The SEC says that one violation example is that “NYSE exchanges used an error account maintained at Archipelago Securities to trade out of securities positions taken on as a result of their operations despite not having rules in effect that permitted them to maintain and use such an account. In another example, NYSE Arca failed to execute a certain type of limit order under specified market conditions despite having a rule in effect that stated that NYSE Arca would execute such orders.”

The alleged violations occurred between 2008 and 2012, which also include charges such Archipelago Securities failing “to establish and maintain policies reasonably designed to prevent the misuse of material, nonpublic information in connection with error account trading.” The broke also violated the net capital rule and did not give the SEC timely notice of this violation.

“The order highlights instances where the exchanges conducted business without a rule in place due to weak or inadequate policies and procedures,” says Antonia Chion, an associate director in the SEC’s Division of Enforcement. “In other instances, the exchanges did not operate in compliance with their effective rules. Both failures reflect a troubling lack of compliance with the requirements and obligations imposed on securities exchanges.”

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