The Securities and Exchange Commission said Friday it was suing a New York-based electronic trading network for using confidential information about its subscribers in marketing presentations over a three month period, according to a statement from the SEC.
Liquidnet is an alternative trading system—commonly known as a “dark pool.” It operates an electronic marketplace where traders can buy and sell stocks in large blocks with complete anonymity. The SEC requires such businesses to keep information about subscribers and their trades confidential, and said Liquidnet improperly used confidential subscriber information to market its services by incorporating the data in presentations and sharing it with other customers.
The SEC said Liquidnet would pay $2 million to settle the case, withoutadmitting or denying any of its findings.
A lawyer representing Liquidnet did not immediately respond to a request for comment, according to Reuters.
—By CNBC with Reuters