ITG Fined By SEC For Allegedly Trading Against Its Own Dark-pool Customers

The Securities and Exchange Commission announced on Wednesday that ITG Inc. and its affiliate AlterNet Securities will pay $20.3 million to settle charges they operated a secret trading desk and misused the confidential trading information of dark pool subscribers. It's the SEC's largest settlement to date against an alternative trading system. Despite telling the public that it was an "agency-only" broker whose interests don't conflict with its customers, the SEC complaint says ITG operated an undisclosed proprietary trading desk known as "Project Omega" for more than a year and accessed live feeds of order and execution information of its dark pool subscribers for its own high-frequency algorithmic trading strategies, including one in which it traded against the subscribers in its dark pool called POSIT. ITG agreed to admit wrongdoing.