Bank of America Says Mistake Inflated Reported Size of Dark Pool

Bank of America Corp. (BAC) said it sent incorrect data to a U.S. regulator that made its private stock trading platform look bigger than it actually is.

The Financial Industry Regulatory Authority, one of the organizations that polices U.S. stock trading, yesterday for the first time published data on the size of alternative trading systems. Bank of America’s Instinct X was the biggest dark pool in the report for the week of May 12-18, just ahead of markets run by Credit Suisse Group AG (CSGN) and Barclays Plc. (BARC)

Bank of America made an error calculating the volume it sent to the regulator, according to Zia Ahmed, a spokesman for the Charlotte, North Carolina-based bank. The company sent a correction to Finra and expects the adjustment to cut its volume roughly in half, the spokesman said. George Smaragdis, a Finra spokesman, declined to comment.

Finra created the repository to reveal how much U.S. equity volume is handled on alternative trading systems including dark pools. The private platforms have won market share from the public exchanges, which now only handle about 60 percent of volume, and drawn scorn from critics including author Michael Lewis, whose “Flash Boys” argues that broker-dealers use dark pools to rip off investors.

The initial report showed Bank of America’s dark pool handled 428 million shares, making it the largest U.S. alternative trading system. Credit Suisse was in second place at 374 million shares, followed by Barclays at 305 million and UBS AG (UBSN) at 278 million.

This wasn’t Bank of America’s first data error this year. Its stock price tumbled 6.3 percent, the most in 17 months, on April 28 after the bank suspended plans for a dividend increase and $4 billion of share repurchases because of a mistake in its stress-test submission to the Federal Reserve.

To contact the reporter on this story: Sam Mamudi in New York at smamudi@bloomberg.net

To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net Chris Nagi

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