Exchanges To Pay $14 Million To Settle Multiple SEC Charges

Author:Mr Steven Lofchie
Profession:Cadwalader, Wickersham & Taft LLP

New York Stock Exchange LLC and two affiliated exchanges (NYSE American and NYSE Arca) (collectively, the "exchanges") agreed to pay a $14 million penalty to settle SEC charges of multiple violations, including the first charged violation of Regulation SCI (Systems Compliance and Integrity). Under Regulation SCI, certain entities, including exchanges, must meet requirements aimed at strengthening the technology infrastructure of the securities markets.

The exchanges were accused of violations in connection with several incidents, including:

improperly disseminating quotes marked as "automated" during a trading halt; applying price collars for certain reopening auctions during a period of market volatility despite there being no rule permitting such action; erroneously implementing a market-wide trading halt; failing to meet the Regulation SCI backup and recovery policies and procedures requirement; and...

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