(Bloomberg) -- A unit of Deutsche Bank AG agreed to pay a $2 million penalty to an industry-backed regulator over allegations it failed to ensure that its customers received the best prices for securities orders.
Deutsche Bank Securities Inc. improperly routed some customer orders through its dark pool known as SuperX from January 2014 to May 2019, the Financial Industry Regulatory Authority said in a Tuesday statement. The brokerage, which didn’t admit or deny the allegations, failed to change the arrangement despite knowing it resulted in delays and lower order fill rates, the regulator said.
The firm was accused of violating the so-called best execution rule, which requires brokers to find the most favorable terms for their customers. Companies must also periodically review the quality of their trade execution by looking at factors such as speed, order size and transactions costs. A bank spokesman declined to comment.
Regulators including the Securities and Exchange Commission have spent years trying to root out wrongdoing on alternative trading systems, which allow clients to buy and sell shares with more anonymity than they can on traditional stock exchanges.
In some cases, Deutsche Bank Securities routed more orders to SuperX than any other dark pool even though the bank ranked other venues higher in terms of execution quality, according to Finra. The firm also failed to disclose to investors material information about its trading systems, the regulator said.
Deutsche Bank closed SuperX in September as part of its exit from U.S. equity sales and trading, according to Finra.