Shares of Virtu Financial (NASDAQ:VIRT) were down over 7% in Wednesday’s pre-market trading, as the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the company. The SEC accused VIRT, one of the leading electronic trading firms, of making false and deceptive statements and not implementing adequate systems to prevent the misuse of sensitive customer information.
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Between January 2018 and the start of April 2019, Virtu’s subsidiary, Virtu Americas LLC, failed to adequately protect the post-trade data related to its customers’ orders. This data included sensitive information such as customer identification and other significant nonpublic details.
In addition, the SEC raised allegations that all employees at Virtu Americas and its associated entities had access to this information. The regulatory body expressed concerns that Virtu’s proprietary traders might have exploited this data by executing trades ahead of their customers’ forthcoming orders.
Furthermore, the SEC has accused Virtu of overstating its security measures for safeguarding institutional investors’ trade data to customers. The regulator seeks to impose a penalty and reimbursement of any profits made from the alleged misconduct.
Meanwhile, the company stated that it had notified the SEC about this lapse during a regulatory examination in 2019. Also, VIRT said it established policies to deter the misuse of confidential information and took measures to bolster controls. Furthermore, the company expressed disappointment over the SEC’s decision to initiate legal action.
What is the Price Target for VIRT Stock?
Overall, Wall Street analysts are currently sidelined on Virtu Financial stock. Virtu has a Hold consensus rating based on one Buy and three Holds. The average VIRT stock price target of $21.50 indicates 16.47% upside potential. Shares of the company have lost about 7% so far this year.
