Datek Will Pay Fine to Settle Fraud Claims

Datek Online Holdings Corp. agreed to pay a $6.3-million fine and cooperate with regulators to settle charges that its day-trading unit committed securities fraud between 1993 and 1998.

The Securities and Exchange Commission and U.S. Atty. James Comey are probing the day-trading operation and its executives, including Jeffrey Citron, 31, and Sheldon Maschler, 57. Datek sold the unit to Heartland Securities Corp. in 1998. The settlement ends the investigation into Datek.

The day-trading firm improperly used the Nasdaq Stock Market’s small order execution system to gain an unfair trading advantage, regulators said. The system was designed to execute small orders for firm’s customers, but Datek Securities used it to make millions of trades for the firm’s own account, reaping more than $250 million in profit, the SEC said.

Citron, who left the firm in 1999, is chief executive of Vonage Holdings Corp.