Virtu Financial announces SEC lawsuit against the company

Virtu Financial provided supplemental information regarding a previously disclosed SEC enforcement matter. As described in recent public filings, Virtu has responded to requests for information from the U.S. Securities and Exchange Commission, or SEC, in connection with an investigation of aspects of its internal information barriers from January 2018 to April 2019, a period that predates Virtu’s integration of post-trade data from Investment Technology Group Inc., or ITG, and has engaged in discussions to settle the matter. As an update, Virtu has been unable to reach an acceptable settlement and the SEC initiated a civil lawsuit against Virtu. The company said, “The SEC’s complaint alleges that (i) Virtu’s policies and procedures were not reasonably designed during the period to prevent the internal misuse of material nonpublic information and (ii) that certain of Virtu’s statements made concerning these policies and procedures were false. Significantly, the SEC does not allege, and there is no evidence to indicate, that any data was ever accessed or used in an inappropriate manner. Virtu rejects the SEC’s allegations and underlying theory that the temporary hypothetical possibility of access by a broader group of Virtu employees rendered its policies and procedures “unreasonable”. Virtu has continuously maintained policies and procedures that were and are reasonably designed to prevent the misuse of confidential information – consistent with its obligations under applicable laws – and public statements made regarding its policies and procedures were true and accurate. In a routine SEC exam in 2019, Virtu voluntarily disclosed to SEC staff that for a limited period during 2018 and early 2019, certain post-trade data in its back-office database was hypothetically accessible to a broader group of employees than intended. The period coincided with the migration of Virtu’s then recently acquired KCG business to a consolidated Virtu back-office database, and predated Virtu’s migration of data related to the ITG business to the database. During this time, other controls and policies mitigated the risk of unauthorized access or use, and the firm developed and ultimately implemented controls enhancements to further restrict database access in accordance with its policies. Following the exam’s conclusion, the SEC Enforcement Staff initiated an investigation with which Virtu has fully cooperated, supplying more than 30,000 documents over a three-year period, none of which indicate any improper use or access. Notably, the SEC’s escalation of its years-long investigation follows Virtu’s public criticism of SEC market structure rule proposals released in December 2022 and Virtu’s lawsuit against the SEC to seek records under the Freedom of Information Act (FOIA) related to the rulemaking process.”