NYSE to Pay $5 Million Penalty to SEC

by The Compliance Exchange on September 14, 2012

NYSE Euronext agreed to pay a $5 million penalty to settle allegations by the Securities and Exchange Commission that technology issues at the New York Stock Exchange gave some customers an “improper head start” on trading information.

The case marks the first time the SEC has ever brought a case that resulted in a monetary penalty against an exchange.

As part of the settlement, NYSE Euronext said it didn’t admit or deny the SEC’s allegations.

The technology issues, which included disparities in the design of its computer systems and software problems, resulted in some customers receiving stock-price and trading data several seconds ahead of the general public.

One internal software problem was particularly pronounced in the “flash crash” on May 6, 2010, the SEC said. During two periods of extraordinarily high volumes of trading that day, the public had to wait as long as 5.3 seconds for updated price quotes, while customers who purchased two NYSE proprietary feeds received updated data within milliseconds, the SEC said.

Read the full story at WSJ.