SEC: Nasdaq Workers Saw Suspicious Trading

The Securities and Exchange Commission said Wednesday that its probe into Nasdaq found that employees saw suspicious trading by MarketXT, an electronic communications network, in 2002 but failed to tell NASD’s regulatory arm.

The SEC said Nasdaq Stock Market Inc. and parent NASD have taken remedial steps to strengthen their roles in self-regulatory oversight of the market.

Nasdaq and NASD, formerly the National Assn. of Securities Dealers, did not admit or deny the findings.

The SEC charged MarketXT and its chief technology officer, Irfan Amanat, with securities fraud for executing “wash” trades and matched orders to get market data rebates from Nasdaq.

“Self-regulatory organizations [such as NASD] are a critical line of defense for investors,” said Mark Schonfeld, head of the SEC’s Northeast regional office. “Even if an SRO’s market and regulatory functions are delegated to separate entities, the SRO must ensure that each entity fulfills its ... responsibilities.”

Representatives of MarketXT and Amanat declined to comment.