NYSE Units Pay $4.5 Million to Resolve SEC Case Over Violations

The New York Stock Exchange and affiliated routing broker Archipelago Securities will pay $4.5 million to resolve regulatory claims that they violated exchange rules and U.S. securities laws in conducting business operations.

NYSE exchanges repeatedly engaged in business practices that either violated exchange rules or required a rule when the exchanges had none in effect, the Securities and Exchange Commission said today in a statement announcing a settlement in its administrative case.

“The SEC regulates exchanges, in part, by reviewing rules proposed by the exchanges that govern exchange activities and allow market participants to decide how and where to place orders,” Andrew J. Ceresney, director of the agency’s enforcement unit, said in the statement. “We will hold exchanges accountable if they fail to have rules governing their operations or fail to follow them.”

In one example cited by the SEC, the NYSE exchanges used an error account maintained at Archipelago to trade out of securities positions taken on as a result of their operations despite not having rules to maintain and use such an account.

The exchanges, without admitting or denying the findings, agreed to settle the claims by retaining an independent consultant and paying the penalty along with Archipelago, the SEC said.

To contact the reporter on this story: Gregory Mott in Washington at gmott1@bloomberg.net

To contact the editor responsible for this story: Sara Forden at sforden@bloomberg.net

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