Citigroup unit to pay $5 million to settle SEC charges

The Securities and Exchange Commission said the unit, LavaFlow Inc, is settling the case without admitting or denying the charges.

The LavaFlow trading venue failed to put adequate safeguards and procedures in place to protect its subscribers' confidential trading information from March 2008 through March 2011, the SEC said in a statement.

Another CITIGROUP (C.NY)affiliate was able to access LavaFlow's subscribers' confidential trading information to decide where to route certain orders, the regulator said.

An attorney for LavaFlow did not immediately respond to an email seeking comment.

The case marks the latest in a string of SEC enforcements in recent years that have targeted alternative trading systems (ATS), a type of trading platform that competes with traditional exchanges.

In early June, ATS operator Liquidnet paid $2 million to the SEC to settle charges that it had improperly used its subscribers' confidential trading information to market its services.

On July 1, Goldman Sachs agreed to pay an $800,000 fine to the Financial Industry Regulatory Authority (FINRA) to settle a case over pricing rule violations in its ATS.

The SEC said the Citigroup case represents the largest-ever penalty imposed so far on an alternative trading system.

(Reporting by Sarah N. Lynch and John McCrank; Editing by Paul Simao)

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