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Tuesday, October 18, 2011 5:29:16 PM
BY Dow Jones & Company, Inc.
— 5:23 PM ET 10/13/2011
--Regulators say Direct Edge exchanges broke rules, made errors
--Millions of dollars in trading losses blamed on violations, says SEC
--Direct Edge says it is responding, takes exchange obligations seriously
By Jacob Bunge
Of DOW JONES NEWSWIRES
The U.S. Securities and Exchange Commission on Thursday sanctioned electronic stock exchange operator Direct Edge for violations and deficiencies that drove millions of dollars worth of customer trading losses, according to regulators.
Regulators charged that in 2010 the company helped exchange members fix erroneous trades driven by an "untested computer code," breaking rules around short-selling and Direct Edge's own guidelines as an exchange, according to regulators.
In a separate incident last April, an employee error disrupted Direct Edge's trading systems, which the company failed to remedy before millions in losses mounted for customers, regulators said in a statement Thursday.
"Direct Edge was required to police not only its members' conduct, but its own conduct as well," said Robert Khuzami, director of the SEC's division of enforcement, in a statement.
The two stock exchanges run by Direct Edge, as well as its order-routing unit, were censured and agreed to take "remedial measures," according to a notice from the SEC.
In a statement, Direct Edge said it had formed a plan to fulfill its markets' obligations as SEC-regulated exchanges, and had made "significant" investments in technology and staff.
"Our entire organization stands committed to these efforts and conducting ourselves as a model exchange operator," representatives of the company said.
Based in Jersey City, N.J., Direct Edge runs the newest of the 13 full-fledged stock exchanges operating in the U.S., having converted its electronic platforms to exchange status in July 2010. Its EDGA and EDGX platforms account for approximately 9.9% of daily trading in domestic shares this month, according to data from BATS Global Markets.
The company is about one-third owned by the International Securities Exchange, the U.S. options unit of Deutsche Boerse AG (DBOEF) .
Trading firms Knight Capital Group Inc.(KCG) and Citadel LLC also own stakes, along with Goldman Sachs Group Inc. (GS) and J.P. Morgan Chase & Co. (JPM).
Direct Edge cooperated with the SEC probe and agreed to settle cease-and- desist and administrative proceedings without admitting or denying fault in the matter, according to regulators.
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com
(END) Dow Jones Newswires
10-13-11 1723ET
Copyright (c) 2011 Dow Jones & Company, Inc.
10/5/07 -- there are no coincidences here ...
oh and like many other longs .. not selling at this level --
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