Mary Jo White will take just a little off the top.
Financial regulators on Wednesday docked a giant high-frequency trading firm and one of its executives $16 million for failing to keep enough capital on its books in "haircut" calculations — the kind of safety measure that has been required of banks to protect the economy in case of a market collapse.
The settlement with Latour Trading is the largest ever for this kind of violation, according to the Securities and Exchange Commission, which announced the fine.
"This record sanction reflects the seriousness of Latour's violations of the net capital rule, which is a critical broker-dealer financial responsibility requirement," Andrew Ceresney, the SEC's head of enforcement, said in a statement.
While it's not a widely known firm outside the secretive world of HFT firms, Latour is a major US trading firm and at one time accounted for 9 percent of all trading volume in the US stock markets, according to the SEC's settlement papers.
For almost two years through December 2011, Latour understated its haircut capital by as much as $40 million, settlement papers said.
The executive — Nicolas Niquet, the former chief operating officer — was responsible for the code that led to the valuation problems even though he had no experience in that area, settlement papers said.
Niquet created fake trading positions so it looked like the company's capital wasn't out of whack, according to settlement papers.
"Latour has fully remediated the problems described in the Commission order, and we are pleased to put them behind us," the company said in a statement.
Latour and Niquet didn't admit or deny any wrongdoing.
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