A trio of exchanges operated by NYSE Group Inc. (NYSE) will have to pay US$14 million to resolve allegations of several securities law violations, including the imposition of improper trading halts.
The U.S. Securities and Exchange Commission (SEC) announced on Tuesday that it has charged the New York Stock Exchange, NYSE Arca and NYSE American with various regulatory failures, including the first ever charge of violating rules designed to shore up U.S. market infrastructure. The SEC says the charges are the result of five separate investigations.
The exchanges agreed to settle the charges without admitting or denying the findings in the SEC’s order, which includes allegations that the NYSE exchanges violated various rules, such as requirements regarding business continuity and disaster recovery.
The violations include erroneously implementing a market-wide regulatory halt and applying price collars during unusual market volatility without having a rule to allow the action, according to the SEC’s order.
“Exchanges play an important role in protecting investors,” says Stephanie Avakian, co-director of the SEC’s division of enforcement, in a statement. “For retail investors to have confidence in our markets, exchanges must provide accurate information and comply with legal requirements, including being equipped for unexpected market disruptions.”