Dark pools are going through a rough patch. Last week, the New York Attorney General filed a lawsuit against Barclays, with a primary focus on their dark pool, Barclays LX. Today, the Financial Industry Regulatory Authority (Finra) has fined Goldman Sachs over pricing errors in their dark pool.
The $800,000 fine was levied on the execution and clearing division of Goldman, stemming from pricing errors in dark pool trading units in 2011. Finra claims "Goldman failed to have reasonably designed written policies and procedures in place to prevent such trade-throughs of protected quotations in connection with trading in its proprietary alternative trading system, Sigma-X." Sigma X is Goldman's dark pool, and one of the largest private dark pools in the trading world.
Unlike the Barclays case, in which the Attorney General claims they had knowledge of their wrongdoing, Finra found Goldman was unaware of the error. Finra determined that there were 395,000 transactions in Sigma X between July 29, 2011 and August 9, 2011. Some of these trades were at prices worse than the national best bid and offer (NBBO.) As a result of these errors, Goldman returned $1.67 million to the customers affected. However, Goldman has still not commented on the matter, and they have neither admitted nor denied the charges against them.