The Securities and Exchange Commission filed charges against registered broker-dealer Bloomberg Tradebook LLC for material misrepresentations and omission of important facts about how the firm handled certain customer trade orders.
The SEC has found that Tradebook routed orders from customers who paid relatively low commission rates through an undisclosed arrangement, internally referred as the “Low Cost Router.” As per the arrangement, Tradebook allowed three unaffiliated broker-dealers to determine the execution venues to which certain customer “immediate-or-cancel” orders would be routed. Affected customers were not informed that instead of Tradebook, a considerable part of their orders will be routed through an unaffiliated broker-dealer.
From November 2010 to September 2018, around 6.4 million Tradebook customer orders were routed through these unaffiliated broker-dealers. The “Low Cost Router” practice was in contradiction to Tradebook’s marketing materials, advertising that customer orders would be routed by Tradebook’s own “advanced” technology, based on price and liquidity factors. Moreover, Tradebook provided unverifiable execution venue information to customers for over a million orders routed using this practice.
Joseph G. Sansone, Chief of the Enforcement Division’s Market Abuse Unit commented:
Joseph G. Sansone
Contrary 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’s costs. Broker-dealers must take care to provide customers with accurate and up to date information about important features of their order routing services.
The SEC found that Tradebook violated an antifraud guideline of the securities laws. The company did not confirm, nor deny the allegations, however Tradebook agreed to be censured and to pay a $5 million penalty, reflecting Tradebook’s significant cooperation with the SEC staff.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.