The operations of the Securities and Exchange Commission (SEC) have gone through lots of criticism lately. More specifically, the crypto industry had been under the radar of the United States financial watchdog. Many industry experts and lawmakers called out the enforcement actions. Current SEC chair Gary Gensler was summoned for the alleged wrongdoings and some are accusing him of turning the SEC into a “banana republic.”
As the New York Post reported, a market maker dubbed Virtu was put under the charge by the SEC. Though the platform had not done anything significant, the report found, the regulator agency booked it in charge since its CEO criticized Gary Gensler.
Virtu’s chief executive officer Doug Cifu reportedly called out the recent enforcement actions and thought Gary Gensler was behind it. He said that Gensler is making efforts to make something right that is not “broken” in the first place. He said that stock trading is going well, “seamlessly and inexpensive.”
The efforts of Gary Gensler to fix the wrongs in the markets might turn “roadkill” for investors whom he is trying to save, he added.
Following the criticism, the charges against Virtu showed up last week which NYP stated as “banana republic” as it noted how the charges against the company are “incredibly weak.”
SEC Brought Weak Case Against Virtu
The U.S. Securities and Exchange Commission (SEC) has raised concerns about Virtu’s activities during a 15-month period spanning 2018 and 2019. During this time, Virtu was in the process of integrating an acquisition, and a control system flaw existed.
According to the SEC, Virtu’s traders had the ability to monitor the company’s actions on the market-making side and potentially engage in profitable trades based on this inside information.
Moreover, the SEC alleges that Virtu misled its customers about these activities, constituting significant violations of securities laws. These allegations highlight serious regulatory issues related to transparency, integrity, and fair practices within the financial industry.
Insider trading is not considered legal in any manner, however, the SEC did not place any complaint. According to Virtu, it did not happen in reality. Rather, the company stated that the SEC is overlooking the fact that additional controls were in place to prevent the issues in question.
Virtu Disagrees with the Regulator’s Arguments
According to the company, the glitch was identified by Virtu itself and it voluntarily reported it to the SEC. Virtu maintains that its misstatements, specifically the failure to disclose the alleged glitch, were not deliberate falsehoods but rather related to the company’s belief that customer data remained secure.
This perspective highlights Virtu’s contention that it acted responsibly by identifying and addressing the issue internally and by cooperating with regulatory authorities. The dispute between Virtu and the SEC underscores differing interpretations of the events and the adequacy of controls in place during the period in question.
Virtu operates as a market maker, functioning as a trading firm that facilitates the matching of buyers and sellers in the stock market. Additionally, the company employs individuals to conduct stock trading using its own capital. The platform is recognized as one of the leading firms engaged in computerized high-speed trading, a practice that involves rapid electronic trading and market liquidity provision.
While computerized high-speed trading has generated controversy in some quarters, it is generally accepted by those with a deep understanding of financial markets as a fundamental aspect of modern market operations.