ITG expects to make a $10 million loss in the second quarter of 2015 due to a fine from US regulators.
Last week, the agency broker said it was close to reaching a settlement over a fine for dark pool rule violations by a subsidiary and has today published further details ahead of an earnings call due to take place later.
The scandal has already claimed the company’s CEO, Bob Gasser, who was abruptly replaced yesterday.
The fine relates to a proprietary trading pilot operating by ITG’s AlterNet Securities subsidiary during 2010-2011. A Securities and Exchange Commission (SEC) investigation is focusing on customer disclosures, Form ATS filings and customer information control relating to the pilot.
Violations include crossing against sell-side clients in POSIT and violations of ITG policy by a former employee, primarily information breaches.
ITG has negotiated a settlement with the SEC that is expected to see ITG pay an aggregate amount of $20.3 million of which $18 million is a civil penalty with a disgorgement of $2.1 million in trading revenues and interest of $250,000. The firm also incurred £2.3 million in legal and other costs.
As a result, the firm expects to announce a GAAP net loss of $10.2 million for Q2, including a reserve for the settlement.
ITG said until the issue is resolved it expects to incur further costs which could be significant.