Bloomberg Tradebook fined $5m for misleading customers
07 May 2020 Washington D.C.
Image: Jer123/Shutterstock.com
Bloomberg Tradebook, Bloomberg’s global agency brokerage business, has agreed to pay $5 million to the US Securities and Exchange Commission (SEC) to settle charges of material misrepresentations and omitting material facts about how the firm handled certain customer trade orders.
The SEC found that Tradebook routed orders from customers who paid low commission rates through an unknown disclosed arrangement, also known as the “low-cost router”.
Tradebook allowed three unaffiliated broker-dealers to determine the execution venues to which certain customer “immediate-or-cancel” orders would be routed, the commission explains.
Tradebook did not inform affected customers that a significant portion of their orders would be routed by an unaffiliated broker-dealer instead of by Tradebook.
Between November 2010 and September 2018, approximately 6.4 million Tradebook customer orders were executed based on routing decisions made by these unaffiliated broker-dealers, this practice contradicted Tradebook’s marketing materials.
“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,” says Joseph Sansone, chief of the enforcement division’s market abuse unit.
Additionally, he noted: “Broker-dealers must take care to provide customers with accurate and up to date information about important features of their order routing services.”
Without admitting or denying the findings in the SEC’s order, Tradebook agreed to be censured and to pay a $5 million penalty, an amount that reflects Tradebook’s significant cooperation with the SEC staff.
The SEC found that Tradebook routed orders from customers who paid low commission rates through an unknown disclosed arrangement, also known as the “low-cost router”.
Tradebook allowed three unaffiliated broker-dealers to determine the execution venues to which certain customer “immediate-or-cancel” orders would be routed, the commission explains.
Tradebook did not inform affected customers that a significant portion of their orders would be routed by an unaffiliated broker-dealer instead of by Tradebook.
Between November 2010 and September 2018, approximately 6.4 million Tradebook customer orders were executed based on routing decisions made by these unaffiliated broker-dealers, this practice contradicted Tradebook’s marketing materials.
“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,” says Joseph Sansone, chief of the enforcement division’s market abuse unit.
Additionally, he noted: “Broker-dealers must take care to provide customers with accurate and up to date information about important features of their order routing services.”
Without admitting or denying the findings in the SEC’s order, Tradebook agreed to be censured and to pay a $5 million penalty, an amount that reflects Tradebook’s significant cooperation with the SEC staff.
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