The banks left their customers on these private exchanges vulnerable to predatory, high-frequency traders that could intercept and profit off their financial transactions, despite assurances by Barclays and Credit Suisse to the contrary, according to a statement by the New York Attorney General.
Dark pools are private exchanges for trading stocks and bonds. Unlike traditional markets with public prices, trades on dark pools are generally confidential, a benefit for companies engaging in large transactions.
Barclays admitted that it misled investors and violated securities laws. The bank, which is based in London and has extensive operations in the US, will pay USD 70 million in penalties. Zurich-based Credit Suisse will pay a USD 60 million penalty.
Both sums will be split evenly between the state of New York and the Securities and Exchange Commission (SEC), which will collect an additional USD 24.3 million related to other violations.
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