A pair of Bloomberg LP subsidiaries are paying over $3.1 million to settle allegations that they violated securities rules by allowing institutional investors to trade on their venues before securing an exemption.
An Ontario Securities Commission (OSC) hearing panel approved a settlement with two European firms — Bloomberg Trading Facility Ltd. (BTFL) and Bloomberg Trading Facility B.V. (BV) — that will see them disgorge the $663,305 in fees they generated from the trading, pay a $2.5-million penalty and carry out an internal compliance review.
In settling the regulator’s allegations, the firms admitted to breaching securities rules when they allowed institutional investors to access their multilateral trading facilities before an exemption was granted.
The settlement said BTFL provided access to 18 institutional investors resulting in trading of approximately US$228.5-billion worth of securities over a 15-month period, including US$57 billion before an exemption was granted.
BV provided trading access to 16 institutional investors before receiving an exemption (which has yet to be granted), and two of those investors executed $4.4-billion worth of trades.
“These are serious and unacceptable breaches of Ontario securities law,” the settlement said. “When marketplaces, including exchanges, operate without authorization in Ontario, they undermine investor confidence and the fairness and efficiency of our markets.”
It also noted that the firms provided “exemplary cooperation” in resolving the case, including carrying out an extensive internal investigation shared with OSC staff.
The settlement indicated that, since the violations were discovered, the firms have implemented new controls designed to prevent future breaches, and they have continued to invest in compliance.
It also noted they were operating with genuine belief, based on legal advice, that they weren’t violating securities law.
“These are two sophisticated corporations, conducting business on a global scale, that failed to comply with Ontario securities laws,” said Jeff Kehoe, director of enforcement at the OSC, in a release.
“These entities must be vigilant in monitoring compliance of their activities with securities laws and have an obligation to report accurately to regulators,” he said. “This expectation applies to every entity carrying on business in Ontario.”