One of Wall Street’s most celebrated Dark Pools, Liquidnet, told its institutional clients last week that its new Equity Capital Markets (ECM) business was under investigation by the Securities and Exchange Commission, the NY Post reports.
At issue was an agency inspection that revealed “some shortcomings,” at ECM, according to a memo by Liquidnet CEO Seth Merrin. The brouhaha revolves around its electronic tool that assisted in luring trading volume from issuers. While details are sketchy, the black eye for Liquidnet could be ironic.
Large investors, such as mutual and pension funds, welcome Dark Pools since, unlike “lit” markets, they are not supposed to publicly reveal details about their trades, according to Joe Saluzzi, co-head of equity trading at Themis Trading….