Bloomberg Tradebook fined $5m for misleading customers
07 May 2020 Washington D.C.
Image: Jer123/Shutterstock.com
Bloomberg Tradebook, Bloomberg鈥檚 global agency brokerage business, has agreed to pay $5 million to the US 麻豆传媒 and Exchange Commission (SEC) to settle charges of material misrepresentations and omitting material facts about how the firm handled certain customer trade orders.
The SEC found that Tradebook routed orders from customers who paid low commission rates through an unknown disclosed arrangement, also known as the 鈥渓ow-cost router鈥�.
Tradebook allowed three unaffiliated broker-dealers to determine the execution venues to which certain customer 鈥渋mmediate-or-cancel鈥� orders would be routed, the commission explains.
Tradebook did not inform affected customers that a significant portion of their orders would be routed by an unaffiliated broker-dealer instead of by Tradebook.
Between November 2010 and September 2018, approximately 6.4 million Tradebook customer orders were executed based on routing decisions made by these unaffiliated broker-dealers, this practice contradicted Tradebook鈥檚 marketing materials.
鈥淐ontrary to representations in its marketing materials, Tradebook let unaffiliated brokers make decisions about the routing of certain customer trade orders in a way that lowered Tradebook鈥檚 costs,鈥� says Joseph Sansone, chief of the enforcement division鈥檚 market abuse unit.
Additionally, he noted: 鈥淏roker-dealers must take care to provide customers with accurate and up to date information about important features of their order routing services.鈥�
Without admitting or denying the findings in the SEC鈥檚 order, Tradebook agreed to be censured and to pay a $5 million penalty, an amount that reflects Tradebook鈥檚 significant cooperation with the SEC staff.
The SEC found that Tradebook routed orders from customers who paid low commission rates through an unknown disclosed arrangement, also known as the 鈥渓ow-cost router鈥�.
Tradebook allowed three unaffiliated broker-dealers to determine the execution venues to which certain customer 鈥渋mmediate-or-cancel鈥� orders would be routed, the commission explains.
Tradebook did not inform affected customers that a significant portion of their orders would be routed by an unaffiliated broker-dealer instead of by Tradebook.
Between November 2010 and September 2018, approximately 6.4 million Tradebook customer orders were executed based on routing decisions made by these unaffiliated broker-dealers, this practice contradicted Tradebook鈥檚 marketing materials.
鈥淐ontrary to representations in its marketing materials, Tradebook let unaffiliated brokers make decisions about the routing of certain customer trade orders in a way that lowered Tradebook鈥檚 costs,鈥� says Joseph Sansone, chief of the enforcement division鈥檚 market abuse unit.
Additionally, he noted: 鈥淏roker-dealers must take care to provide customers with accurate and up to date information about important features of their order routing services.鈥�
Without admitting or denying the findings in the SEC鈥檚 order, Tradebook agreed to be censured and to pay a $5 million penalty, an amount that reflects Tradebook鈥檚 significant cooperation with the SEC staff.
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