WASHINGTON (AP) -- A market trading unit of Citigroup Inc. has agreed to pay $5 million to settle federal civil charges that it failed to protect its customers' confidential trading data.
The Securities and Exchange Commission announced the settlement Friday with Citigroup's LavaFlow Inc. It operates a so-called alternative trading system, which makes stock trades for brokerage firms and other traders. The amount LavaFlow is paying includes a $2.85 million penalty, the largest the SEC has imposed on an alternative trading system.
New York-based LavaFlow neither admitted nor denied the allegations.
The SEC said LavaFlow improperly allowed an affiliate to gain access to and use confidential information on customers' trading orders from 2008 through 2011. About 400 million shares were traded during that period using the affiliate's technology, the SEC said.