BD Fined $10 Million Because Prop Trading Desk Mis-Used Customer Trading Data
A large broker-dealer agreed to pay $10 Million dollars
for allowing its proprietary trading desk to mis-use customer trading data and
for charging undisclosed mark-ups.
According to the SEC, the BD housed its proprietary trading desk in the
same physical location as its institutional trading desk, allowing the
proprietary traders access to customer trades.
The SEC alleges that the proprietary traders followed trades made by
large institutional clients. The SEC
also alleges the BD charged undisclosed commission mark-ups in riskless
OUR TAKE: Buy-side portfolio managers should exercise
caution when using a firm that also has a proprietary trading desk because of
the inherent conflicts of interest that could limit the effectiveness of