The SEC sued financial firm Virtu Financial Inc., accusing the market maker and trading-execution firm of leaving customer trading data vulnerable to misuse.
The Securities and Exchange Commission on Tuesday said it sued financial firm Virtu Financial Inc., accusing the market maker and trading-execution company of leaving customer trading data vulnerable to misuse, misleading customers on its data protections and taking in commissions regardless.
However, the agency alleged, Virtu Americas over that period “failed to safeguard a database that contained all post-trade information generated from customer orders routed to, and executed by, Virtu Americas, including customer identifying information and other material nonpublic information.” The SEC alleged that database, thanks to frequently-shared generic usernames and passwords, was open to “practically anyone” at Virtu Americas and its affiliates, including its proprietary traders.
“At a time when Virtu Americas handled around a quarter of all market orders placed by retail investors in the U.S., we allege that proprietary traders had nearly unfettered access to material nonpublic information about its institutional customers’ trades — information which could be abused for personal gain,” Gurbir S. Grewal, director of the SEC’s enforcement division, said in a statement.
Virtu, in a statement on Tuesday, said it had been responding to requests for information from the SEC over the matter. In a filing in July, Virtu said it had received a notice, and that it expected the SEC to file an action against the company. But it said the lawsuit “focuses on hypothetical internal access to data.”
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