8. Heart of Darkness

On October 24, 2011, while working a few trades for Themis clients, Sal noticed a news headline scroll across his Bloomberg terminal: “Alternative Trading System Agrees to Settle Charges That It Failed to Disclose Trading by an Affiliate.”

“Hey Joe, check this out,” Sal said. “The SEC is charging an ATS with wrong-doing...whoa, it’s the Pipe!”

“What?” Joe asked. “You’re joking, right?”

We went to the SEC website to get the details. Pipeline, a dark pool that most of Wall Street used to trade large orders, was fined for engaging in proprietary trading in its agency crossing network, unbeknown to its clients. The SEC had been looking into allegations of misconduct for a period of time, most likely due to a whistle-blowing tip ...

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