Citi fined $13M for ‘dark pool’ trading

Federal regulators slapped Citigroup with a nearly $13 million fine, accusing the bank of failing to protect stock-trading clients after charging them high fees for a “dark pool” to screen out predatory traders.

CEO Michael Corbat’s bank made “material misstatements and omissions” about Citi Match, a less regulated securities exchange that’s often called a dark pool on Wall Street, according to a Friday consent order from the Securities and Exchange Commission.

The order is the latest action taken by the feds against alleged misrepresentations made by banks in order to get clients to use their dark pools. Barclays, Credit Suisse, and Goldman Sachs have all paid fines since 2014 over their trading systems.

Citi told clients that all orders would be executed on Citi Match, which it said was free of high-frequency traders who have been accused of taking advantage of pension funds and other big investors. according to the SEC.

But in reality, the bank let two of the high-frequency trading firms secretly snap up about 17 percent of all transactions, by dollar volume, according to the SEC.

Citi likewise exported about half of the trades to other, unprotected platforms that were vulnerable to high-frequency sharks — including one that was run by Citi, the SEC said.

“Market participants deserve to make informed decisions about where they execute their orders,” said Joseph G. Sansone, chief of the SEC Enforcement Division’s Market Abuse Unit.

“We are pleased to have the matter resolved,” Danielle RomeroApsilos, a Citi spokeswoman, told The Post.