Barclays, Credit Suisse settle ‘dark pool’ probes

Global banks Barclays PLC and Credit Suisse Group AG will pay a record $154.3 million in combined settlements of allegations they misled customers who used the banks’ private trading venues known as dark pools, officials said Monday.

The settlements, announced by the Securities and Exchange Commission and the New York Attorney General’s office, mark the largest penalties in U.S. history against dark pools. The venues have been the subject of complaints that they favor high-frequency traders over institutional traders. Unlike regular stock exchanges, dark pools do not display the best trading bids and offers to the public.

Barclays and Credit Suisse, operators of two of the largest U.S. dark pools, misled customers about trading conditions and par- ticipants in their dark pools, according to the SEC and New York attorney general. London-based Barclays falsely told clients it would “continuously police” trading order flow in its LX dark pool, probers found.

Credit Suisse falsely told customers its Cross-finder dark pool characterized trader order flow in an objective and transparent manner, the settlements said.

The Swiss banking giant separately said it would identify “opportunistic” traders and oust them from Credit Suisse’s Light Pool, an electronic communications network.

But investigators found that both types of subscribers were able to continue Light Pool trading.

“These cases mark the first major victory in the fight to combat fraud in dark pool trading,” said New York Attorney General Eric Schneiderman.

Barclays and Credit Suisse said they were pleased with the resolutions.