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UBS Dark Pool Operation Leads to SEC Charges

Jaclyn Jaeger | January 16, 2015

The Securities and Exchange Commission this week charged a UBS subsidiary with disclosure failures and other securities law violations related to the operation and marketing of its dark pool. UBS Securities agreed to pay more than $14.4 million, including a $12 million penalty—the SEC’s largest against an alternative trading system (ATS).

According to the SEC, UBS failed to properly disclose to all subscribers the existence of an order type—called PrimaryPegPlus (PPP)—that it pitched almost exclusively to market makers and high-frequency trading firms.  PPP enabled certain subscribers to buy and sell securities by placing orders priced in increments of less than one cent in violation of Regulation NMS. By doing so, UBS enabled PPP users to place sub-penny-priced orders that jumped ahead of other orders submitted at legal, whole-penny prices...

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