| As SEC Sues Virtu For
Allowing Access to MNPI Motions to
Dismiss Are Denied in SDNY
by
Matthew Russell Lee, Patreon Book
Substack
SDNY
COURTHOUSE,
Aug 9 – When the SEC
filed suit in September 2023,
Gurbir Grewal, director of the
SEC's enforcement division
said, "at a time when Virtu
Americas handled around a
quarter of all market orders
placed by retail investors in
the U.S., we allege that
proprietary traders had nearly
unfettered access to material
nonpublic information about
its institutional customers'
trades... Virtu repeatedly
misled institutional customers
and the market."
On
August 8, 2024 Virtu's motions
to dismiss were argued before
and decided on - dismissed -
by U.S. District Court for the
Southern District of New York
Judge John G. Koeltl. Inner
City Press was there, thread:
Judge
Koeltl: You haven't moved to
dismiss Count 4. Virtu lawyer:
The rest should be dismissed.
Judge: The SEC says the claims
about safeguards are
misleading. How can I decide
this on a motion to dismiss?
A: Like Judge Abrams on
Phillip Morris, Judge Failla
on Chipotle
Virtu lawyer:
Also consider Judge Engelmayer
on SolarWinds. Here the SEC
had three years and 30,000
documents, they have no
proof. Judge: Why should
I consider a partial
dismissal? Virtu's lawyer: It
might not limit discovery but
it would limit its impact and
the remedies they can ask
for
SEC lawyer: Maybe
they don't even know if and
how often the flaws have been
exploited. Virtu's lawyer:
Their theory was rejected by
Judge Failla in Chipotle.
Judge: I'm
prepared to decide.
Judge: The SEC
alleges the defendants allowed
nearly unrestricted access to
MNPI [material non public
information] but misled
customers and the public that
they had safeguards... There
is no similar case. The motion
is dismiss under Section 15(g)
is denied.
Judge: And The
motion to dismiss under
Section 17(a)(3) is denied.
The motions to dismiss are
denied. The case will go
forward.
The case is
Securities and Exchange
Commission v. Virtu Financial
Inc. et al., 23-cv-8072
(Koeltl)
***
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