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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