SEC fines NYSE and affiliate for failing to comply with rules

This fine marks the second time the SEC has come down on the NYSE, with the last instance occurring in 2012.
By Ananth Baliga  |  May 1, 2014 at 4:14 PM
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NEW YORK, May 1 (UPI) -- The NYSE and affiliated routing broker Archipelago Securities have been fined $4.5 million by the SEC for violating exchange rules and U.S. securities laws.

The Securities and Exchange Commission said that the New York Stock Exchange, which issues rules governing everything from how traders connect their computers to when prices are disseminated to floor brokers, violated exchange rules or established weak self-regulation for trading.

“The SEC regulates exchanges, in part, by reviewing rules proposed by the exchanges that govern exchange activities and allow market participants to decide how and where to place orders,” Andrew J. Ceresney, director of the agency’s enforcement unit, said in the statement. “We will hold exchanges accountable if they fail to have rules governing their operations or fail to follow them.”

NYSE subsidiaries were also charged with establishing faulty guidelines for accounts they used to trade in and out of securities when computer errors occur.

For example, NYSE used an error account maintained at Archipelago to trade securities based on positions they had taken during the course of their operations without having any rules for the use of such accounts.

Archipelago maintained these accounts to trade securities that it acquired when computer malfunctions required it to buy or sell stock to maintain an orderly market.

NYSE and its subsidiaries have agreed to pay the fine without either confirming or denying the violations.

The SEC said that NYSE either acted in violation of its own rules or at times didn't have strong enough rules to govern its functioning in certain cases. Like other stock trading venues, the NYSE is self regulated and charged with formulating its own rules.

NYSE was fined $5 million by the SEC in 2012 for giving certain customers access to financial data before the public.

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