ITG to pay $20M on SEC charges it ran secret trading desk

NEW YORK (AP) — Investment Technology Group Inc. will pay a record $20.3 million to settle charges that it ran a secret trading desk that used confidential customer trading information for profit, including bets against its customers.

The U.S. Securities and Exchange Commission said today that ITG earned nearly $2.1 million secretly trading data gleaned from its own customers between 2010 and 2011. ITG will pay back those earnings, plus a penalty of $18 million and more than $256,000 in interest, the SEC said. The settlement is the largest amount paid by an alternative trading system.

According to investigators, ITG told customers that it was a broker only, but covertly operated a trading desk known as "Project Omega" in concert with its dark pools, which allow anonymous trades between buyers and sellers.

ITG used customer data on those orders to make its own trades.