ITG Replaces Top Executive After Disclosing Potential SEC Settlement

Investment Technology Group Inc. said Monday that it has replaced Chief Executive Bob Gasser with board member and E*Trade Financial Corp. veteran Jarrett Lilien, after disclosing a possible dark-pools settlement with the Securities and Exchange Commission last week.

"We are very pleased that Jarrett has agreed to serve as interim CEO, while we consider our options for a permanent CEO," said Maureen O'Hara, chairwoman of ITG's board. Mr. Lilien was chief operating officer and president at E*Trade.

ITG said it also has accelerated its second-quarter earnings report and expects to release the results after the market closes on Monday.

Last week, ITG disclosed that it was planning to settle a major dark-pool enforcement action with the SEC.

Dark pools are trading venues where investors buy and sell shares anonymously and several are run by the largest financial institutions. They have come under more intense regulatory scrutiny in recent years with watchdogs accusing some of Wall Street's largest firms of misleading clients or treating them unfairly.

The SEC investigated ITG for alleged violations of customer-information controls and internal policies that took place during a pilot program run by broker-dealer subsidiary AlterNet Securities Inc. in 2010 and 2011, the firm said, as well as a lack of client disclosures about the program.

Under a potential settlement negotiated with the staff of the SEC's enforcement division, ITG would pay $20.3 million. This would include a civil penalty of $18 million, disgorgement of about $2.1 million in trading revenue and prejudgment interest of about $250,000.

ITG said Monday that the settlement is in progress and the company concluded an independent review of the matter last week.

"We hope to expeditiously finalize the settlement and to work with our customers, shareholders and employees to restore confidence in our company and its capabilities," Ms. O'Hara said in a news release.

ITG gained 2.2% in morning trading to $20.80 a share.

Write to Chelsey Dulaney at [e-mail]

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