SEC v. Virtu Financial Inc.; and Virtu Americas LLC, No. 1:23-cv-08072, Southern District of New York (Dec. 3, 2025) — Complaint

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,
    Civil Action No. 1:23-cv-8072 (JGK)
v.

VIRTU FINANCIAL INC. and
VIRTU AMERICAS LLC,

   JURY TRIAL DEMANDED

Defendants.

AMENDED COMPLAINT
Plaintiff Securities and Exchange Commission (“Commission”), for its Amended
Complaint against Defendants Virtu Financial Inc. (“VFI”) and Virtu Americas LLC (“VAL”)
(collectively “Defendants”),  alleges as follows:
SUMMARY
1. This matter relates to false and misleading statements by Defendant VFI and its
subsidiary VAL, an SEC registered broker-dealer that processes approximately 25% of market
orders placed by retail investors in the U.S., and VAL’s associated failure to establish, maintain,
and enforce policies and procedures reasonably designed to prevent the misuse of material,
nonpublic information (“MNPI”).
2. Defendants repeatedly – and falsely – told their institutional customers and the
public that VAL used “information barriers” and “systemic separation between business groups”
in order to safeguard these customers’ MNPI.  In fact, VAL did not place this information behind

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information barriers that safeguarded MNPI.  During a 15-  month period, virtually all employees
at VAL and its affiliate broker-dealers could access MNPI regarding its customers’ trades, which
included the name of the customer, the name of the security purchased by the customer, the side
(buy or sell), the execution price, and the execution volume.
3. Defendants provided access to this information, regardless of whether t he
employee had a valid business need for such information.  Such trading information, when
collected in this form, constitutes MNPI, and access to such MNPI could be valuable to a trader.
For example, a trader could observe that VAL had executed the orders of a large institutional
customer throughout the day, understand that the same customer may follow a similar trading
pattern over the next day or days, and take advantage of such information by trading ahead of the
customer’s subsequent orders.
4. Specifically, from at least January 2018 through April 2019 (the “Relevant
Period”), VAL maintained a primary database for daily business operations and a backup
database (collectively, the “FS Database”) that contained all post-trade information generated
from VAL’s customer orders – including, among other things, specific customer-identifying
information, the security name, the side (buy or sell), and the execution price and volume.
5. Due to the lack of effective information barriers during the Relevant Period,
anyone at VAL, including proprietary traders at VAL and its affiliates, was able to directly
access the FS Database and its MNPI using a widely known and frequently shared generic
username and password.  This was so even though VAL purported to prohibit proprietary traders
from accessing post-trade information from VAL’s customers to prevent the risk of misconduct.
Despite specific discussions of the deficiency occurring no later than August 13, 2018, VAL did
not fix it until at least April 2, 2019.

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6. During the Relevant Period, VAL made and disseminated materially misleading
statements, and omissions which rendered other statements materially misleading, to at least six
customers regarding the purported information barriers at VAL.  VAL’s parent, VFI, also made
and disseminated similar materially misleading statements and omissions, which rendered other
statements materially misleading, regarding purported information barriers in two public
presentations and a press release.
7. Before VAL implemented appropriate information barriers in the FS Database in
April 2019, Defendants also issued a letter to VAL customers falsely stating that VAL
maintained procedures to segregate and protect sensitive customer data, when VAL did not do
so.  Throughout the Relevant Period, in addition to disseminating these materially misleading
statements and omissions, which rendered other statements misleading, VAL and VFI took
further steps described herein to engage in a practice or course of conduct that operated or would
operate as a fraud or deceit upon purchasers.  Their conduct violated Sections 17(a)(2) and
17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(2) - ( 3)].
8. VAL also failed to establish, maintain, and enforce written policies and
procedures reasonably designed to prevent the misuse of MNPI.  This was particularly important
given the nature of VAL’s business.  It operated both a proprietary trading business, in which it
bought and sold securities in its own account and for its own benefit, as well as a trade execution
business for its large institutional customers, whereby it executed buy or sell orders from
customers, typically for a commission.
9. Notwithstanding these dual businesses, VAL failed to establish, maintain, and
enforce reasonably designed policies and procedures to ensure that proprietary traders at VAL
and its affiliates could not access VAL customers’ MNPI, including by failing to impose

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reasonable information barriers.  Indeed, VAL did not track who logged into the system that
stored its customers’ MNPI, did not track what information was extracted from the database by
proprietary traders, and ultimately cannot determine to this day whether its traders abused the
trust placed in Defendants by customers who relied on them to handle their MNPI.  By failing to
establish, maintain, and enforce policies and procedures reasonably designed to prevent the
misuse of material nonpublic customer information, VAL’s conduct violated Section 15(g) of the
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §78o(g)].
JURISDICTION AND VENUE
10. This Court has subject matter jurisdiction over this action pursuant to Exchange
Act Sections 21(d) and 27 [15 U.S.C. §§§78u(d) and 78aa] and Securities Act Sections 20(b) and
22(a) [15 U.S.C. §§77t(b) and 77v(a)].  In connection with the conduct alleged in this Amended
Complaint, Defendants, directly or indirectly, made use of the means or instruments of
transportation or communication in interstate commerce, or the means or instruments of
interstate commerce, or of the mails, or of any facility of any national securities exchange.
11. Venue is proper in this District pursuant to Exchange Act Section 27 [15 U.S.C.
§78aa] and Securities Act Section 22 [15 U.S.C. §77v].  Certain of the acts, practices,
transactions, and courses of business constituting the violations alleged in this Amended
Complaint occurred within this District.  As noted in the subsequent paragraphs, Defendants’
executive offices are located within this District.
DEFENDANTS
12. VFI is a Delaware corporation headquartered in New York, New York.  VFI’s
common stock is registered pursuant to Section 12(b) of the Exchange Act.  VFI’s common stock
trades on the NASDAQ.

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13. VAL is a Delaware limited liability company with principal executive offices in
New York, New York.  It is a broker-dealer registered with the Commission.  VAL is a
subsidiary of VFI and was previously known as KCG Americas LLC prior to VFI’s acquisition
of KCG Holdings, Inc. in July 2017.
FACTUAL ALLEGATIONS
A.  VAL and Affiliates’ Proprietary Trading and Trade Execution Businesses
14. VAL and its affiliates were SEC-registered broker-dealers that operated two
distinct types of businesses: (i) customer-facing trade execution services, which generate MNPI
regarding customers’ trade orders and executions; and (ii) proprietary trading operations, which
must be prevented from misusing that same MNPI when trading on VAL’s or its affiliates’
behalf.
15. Because the federal securities laws require broker-dealers to implement and
maintain policies and procedures reasonably designed to prevent the misuse of MNPI, VAL
purported to maintain information barriers, which are a standard method used by broker-dealers
and other financial institutions to prevent the use of MNPI, by VAL and its associated persons.
As detailed below, following an acquisition that required combining new trade execution
services with existing proprietary trading operations, VAL’s failure to implement reasonably
designed information barriers meant that proprietary traders had essentially unfettered access to
its customers’ MNPI for approximately 15 months.
B. Relevant Background on and Operation of the FS Database
1. Pre-KCG Acquisition

16. In July 2017, VFI acquired KCG Holdings, Inc. (“KCG”), which owned a broker-
dealer firm with a large trade execution business.  Prior to the KCG acquisition, VFI’s operating

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subsidiaries ( collectively “Legacy Virtu”) primarily bought and sold securities in Legacy Virtu’s
own account and for its own benefit.  Legacy Virtu maintained the FS Database for its daily
business operations, and it recorded information regarding its trades into the database seconds or
milliseconds post execution.
17. Before the KCG acquisition (and continuing thereafter), Legacy Virtu’s
employees could access the FS Database through two means.
18. First, an employee could log into a graphical user interface (“GUI”).  Employees
accessing the FS Database via the GUI were required to enter their unique log-in credentials and
could access only information necessary for their role at the firm – a process typically known as
“permissioning.”
19. Second, an employee could log into the FS Database directly using a username
and password, a technique that allowed them to search the database.  These usernames and
passwords were not specific to individual employees; instead, employees used the generic
“viewonly” as both username and password.  Similarly, employees could access the backup FS
Database using the generic “fsviewonly” as both username and password.  Users accessing the
FS Database this way could access all data in it, regardless of their role at the firm or business
need.  Before the KCG Acquisition, Legacy Virtu did not have a significant trade execution
business, so the lack of information barriers did not result in the risk that Legacy Virtu’s
proprietary traders would access customer MNPI.
2. Post-KCG Acquisition

20. In July 2017, VFI acquired KCG and formed VAL, which mainly operated the
customer-facing trade execution business acquired from KCG, and some of KCG’s proprietary
trading business.  This newly acquired trade execution business meant that VAL bought and sold

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orders for large institutional customers.  Customers typically paid a commission to VAL each
time they executed a trade using its execution services.  No later than January 2018, VAL began
storing sensitive customer trade execution information in the FS Database, which also continued
to house Legacy Virtu proprietary trade data.
21. Under VAL’s policies and procedures at the time, proprietary traders were
supposed to be walled off from access to certain customer trade details (from the trade execution
business) to prevent them from having access to MNPI that could potentially provide them a
trading advantage.  But, despite its recognition of the need for such policies and procedures,
VAL failed to implement and enforce them with respect to direct access to the FS Database, one
of the primary means of accessing MNPI.
22. VAL’s customer trade execution data that were entered into the FS Database
constituted MNPI.  The “consolidated tape,” a high-speed electronic system that reports the latest
price and volume data on sales of exchange-listed stocks, publicly reports in real-time a subset of
the trade information contained in the FS Database.  It does not, however, provide critical additional
details that are in the FS Database, namely specific customer identifying information along with
the side (buy or sell), the security, price, volume, and the trading algorithm used for each order.
23. Despite compiling this sensitive customer data in its FS Database, VAL did not
review or update the permissioning for direct access to the database to prevent access to
customer post-trade information by employees who did not have a business need to access that
data.  Because the generic usernames and passwords for direct access were widely known and
shared, virtually all employees, including VAL and Legacy Virtu proprietary traders, effectively
had unrestricted access to the MNPI in the FS Database.

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24. During the Relevant Period, proprietary traders at VAL and Legacy Virtu had
expertise in creating trading algorithms, known as “strategies,” that aim to improve trading
revenues.  Each trading strategy was typically automated to incorporate a series of instructions
and data, some of which came from the FS Database.  VAL and Legacy Virtu had hundreds of
thousands of individual strategies or instances of strategies that ran on a daily basis as part of the
proprietary trading business, and many relied on the direct-access method, with its generic
“viewonly” or “fsviewonly” login credentials, to source data from the FS Database.
25. In approximately August 2018, VAL’s database developers started to discuss a
need to improve the inadequate permissioning for the FS Database, apparently as a result of the
due diligence process for VFI’s pending acquisition of Investment Technology Group, Inc.
(“ITG”), another broker-dealer.  On August 13, 2018, over 20 employees from different
departments at Legacy Virtu received an email indicating that the FS Database needed a
“revamp” to remediate the permissioning and thus were put on notice.  In December 2018, the
topic of remediating the database resurfaced and the main database developer commented, “I was
going to start on it this week but have been side tracked.”
26. Nevertheless, despite developers and others becoming aware no later than August
2018 that proprietary traders had access to customers’ post-trade MNPI, VAL took no immediate
steps to mitigate the risk of misuse of the MNPI.  Instead, VAL continued for another eight
months to enter customer post-trade information into the FS Database, continued to allow direct
access to such information with the generic login credentials, and issued no statements,
directives, or guidance to proprietary traders that they should cease or limit their direct access to
the FS Database.  During that period – in which VAL handled approximately 25% of all market
orders placed by retail investors in the U.S. – its failure to fix the problem perpetuated the

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substantial risk (present since at least January 2018) that proprietary traders could access and
misuse the MNPI.
27. The customer-specific, and virtually real-time, post-trade information contained in
the FS Database would be valuable to a proprietary trader because it would, among other things,
provide insights into which VAL customers were trading in the market (and in what securities) at
present, as well as the direction and size of each customer’s order flow.  Additionally, because
large orders by VAL’s institutional customers could be broken up into smaller orders placed over
one day or several days, such post-trade information could provide further material, nonpublic
insight into orders that may be forthcoming in a particular security.
C. Defendants Made and Disseminated Materially False and Misleading
Statements, and Omissions Which Rendered other Statements Materially
Misleading, to Customers and the Public Regarding VAL’s Information
Barriers
28. Defendants made and disseminated a series of false and misleading statements
and omissions, which rendered other statements materially misleading, to customers and the
public regarding VAL’s purported information barriers.  These statements and omissions were
material because a reasonable investor-customer would have relied on them when selecting VAL
to execute its trades.  Even after internal discussions about the need to remediate the
permissioning deficiencies, Defendants failed to correct or clarify the false or misleading
statements.
1. November 2018 and March 2019 Public Presentations

29.   In presentations on November 7, 2018 and March 13, 2019, VFI made and
disseminated materially misleading statements and omissions, which rendered other statements
materially misleading, to actual and potential customers and investors.  Both presentations stated
that “Virtu has established policies and procedures designed to safeguard sensitive client

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information” including “[t]echnology access controls to segregate sensitive information” and
“[r]eview of approved personnel and permissions.”  During the November 2018 earnings call and
presentation, VFI’s CEO reiterated these statements to the public:
You see the importance we place on protecting client information in all aspects of
our business.  We take this obligation seriously and we recognize and appreciate
the natural concerns customers will no doubt have.  Virtu has established policies
and procedures for our existing client and market-making businesses that are
designed to safeguard sensitive client information and will continue to design our
policies and procedures with our clients in mind.  These safeguards include
physical separation, logical access control and entitlement reviews.
(Emphasis added.)  These statements were false and materially misleading because the
assurances of “logical access control and entitlement reviews” failed to reference – and were
wholly at odds with – the direct access permissioning issues for the FS Database, including
Defendants’ failure to review or update the permissioning for the FS Database to prevent access
by employees who did not have a business need-to-know, as described in detail above.  The
statements misled Defendants’ customers and the public into believing that Defendants’ policies
and procedures to safeguard customers’ MNPI were effective, enforced, and applicable to all
means of accessing the information.  The statements were material
 because a reasonable investor
would have relied on them when selecting VAL to execute its trades.
2. March 2019 Letter to Customers

30. On or around March 1, 2019, Defendants made and widely disseminated
materially misleading statements in a letter to existing VAL customers regarding the ITG
merger.  Certain customers received the letter from the CEO’s “virtu.com” email address.
Others received the letter as a PDF attachment to an email which contained the “Virtu Financial”
logo.  Both versions were signed by VFI’s CEO and stated: “Prior to merging both Virtu and
ITG each maintained our own procedures to segregate and protect sensitive client data.”  This

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statement was materially misleading because it omitted the availability of direct access to the FS
Database by Defendants’ proprietary traders without appropriate permissioning.  At certain large
customers, multiple employees received the same emailed letter.  For example, at one customer,
eight of its employees separately received the emailed letter.
3. January 2019 Press Release

31. In a January 25, 2019 press release, VFI made and disseminated a similar
materially false and misleading statement.  In providing an update regarding the acquisition of
ITG, the press release stated, “Post closing, Virtu intends to continue to maintain and enforce
appropriate information barriers to segment and protect sensitive client data.”  The statement was
misleading because at the time, VAL failed to adequately implement and enforce its information
barriers as to the direct access permissioning of the FS Database, allowing access to any
employee with the widely shared generic username and password to access sensitive client data.
The statement was material because a reasonable investor would have relied on it when selecting
VAL to execute its trades.
4. Responses to Customer Due Diligence Questionnaires

32. Customers of VAL’s execution services periodically sent VAL due diligence
questionnaires for VAL to complete and return.  Customers used these questionnaires to evaluate
or reevaluate whether VAL should be an approved broker-dealer for executing their orders.
Some of the questionnaires included specific questions about VAL’s information barriers and
access controls in place to protect customer trade information, including post-trade information.
VAL’s compliance department typically received input from multiple departments to respond to
the questionnaires.

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33. During the Relevant Period, VAL made and disseminated materially false and
misleading st atements, and omissions which rendered other statements materially misleading,
concerning its handling of customer information and information barriers when responding to at
least six customer questionnaires.  These statements were false and misleading because they
failed to reference – and were wholly at odds with – the reality of the direct access permissioning
described in detail above.  They would mislead reasonable investors into believing that
Defendants’ policies and procedures were designed to safeguard MNPI and were effective,
enforced, and applicable to all means of accessing the information.
34. VAL’s statements were material because as noted above, the questionnaires were
used to evaluate or reevaluate whether VAL should be an approved broker-dealer to handle
customer orders, and a reasonable investor would have relied on them when selecting VAL to
execute its trades.  Although VAL had identified the direct access permissioning issue on or
before August 13, 2018, VAL did not take steps to inform its customers of that permissioning
issue, even while it was in the process of being remediated.
35. These misstatements were also material to customers’ decision whether to route
their orders to VAL.  VAL’s customers consider their post-trade information sensitive,
nonpublic, and material,  and are concerned that this information could be used to engage in
trading abuses including front-running if their information is not adequately protected.
36. In a January 2019 questionnaire, an investment adviser customer (“Customer A ”)
asked VAL: “  Do any cash traders, research sales and/or proprietary traders see electronic order
flow information, whether this is intraday or post-trade?  What safeguards do you have in place
to maintain the confidentiality of our order flow?” VAL misleadingly responded: “No. The Firm
employs information barrier processes and procedures as part of its oversight functions, such as

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procedures to approve and review systems entitlements for all of the Firm’s business units,
including Electronic Execution Services.”  These statements were materially false and
misleading because VAL did not employ reasonable, meaningful information barrier processes
with respect to direct access to the FS Database, and thus Defendants’ proprietary traders (and
others) in fact did have access to electronic post-trade order information.  Moreover, the shared
usernames and passwords, by their nature, bypassed any requirements to approve or review
system entitlements.
37. In another January 2019 questionnaire, an investment adviser customer
(“Customer B”) asked what policies and procedures VAL had in place to protect “client
confidential information.”  VAL misleadingly responded that it had “encryption/password
protection” and “access controls” in place.  These statements were materially false and
misleading because, for the reasons described throughout, the confidential information in the FS
Database did not have adequate password protection and there were no reasonable, meaningful
access controls in place for direct access.  Customer B received VAL’s responses and used
VAL’s execution services thereafter, paying money to VAL.
38. In a November 2018 questionnaire, an investment adviser customer (“Customer
C”) asked who at VAL had access to “real-time and post trade” information (emphasis added).
In its response, VAL listed certain categories of employees who had access to Customer C’s
post-trade information, but failed to include others on that list, including proprietary traders, who
could access the very same information through direct access to the FS Database:  “Electronic
Execution Services Sales and supervisory personnel as well as certain support personnel in
technology, operations, finance, compliance and legal may have access to systems containing
[Customer C’s] post trade information.”

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39. Moreover, VAL responded to Customer C that it “employs information barrier
processes and procedures as part of its oversight functions, which include processes to approve
and review systems entitlements for the Firm’s business units.”  VAL repeated the same sentence
in a separate question that asked about “oversight” at VAL.  These statements were materially
misleading because they falsely implied that the systems entitlements for the FS Database were
subject to ongoing review and approval, when in fact there were no reasonable, meaningful
systems entitlements in place for direct access to the FS Database throughout the relevant period
beyond the generic and widely shared “viewonly” credentials.  Customer C received VAL’s
responses and continued to use VAL’s execution services thereafter, paying money to VAL.
40. In an August 2018 questionnaire, an investment adviser customer (“Customer D”)
asked VAL to confirm that “[o]nly employees with a need to access confidential information in
order to provide required services have access to such confidential information.”  VAL falsely
replied “Yes.”  This statement was materially false and misleading because virtually any
employee, including proprietary traders, could access the FS Database via direct access.
Customer D received VAL’s responses and used VAL’s execution services thereafter, paying
money to VAL.
41. In a July 2018 questionnaire, an investment adviser customer (“Customer E”)
asked about changes or violations to the firm’s privacy policy, to which VAL inaccurately
answered that it “maintains information barrier policies and procedures that are designed to
segregate client orders to those business units within the firm that have a need to know of the
information.”  This statement was materially false and misleading because business units within
VAL or Legacy Virtu that did not have a need to know of customer information nevertheless

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could access the information in the FS Database via direct access.  Customer E received VAL’s
responses and used VAL’s execution services thereafter, paying money to VAL.
42. In a March 2018 questionnaire, an investment adviser customer (“Customer F”)
asked who at VAL had access to its information.  VAL misleadingly responded, “Our policies
provide that only personnel whose job function requires access to real time and historical order
and execution information are permissioned to see this information.”   VAL stated that those
personnel “currently consist[] of the business supervisors, client service personnel, risk
management, sales coverage, compliance and other similar personnel with a bona fide business
need to know such information.” Customer F also asked about information barriers specifically,
to which VAL responded, “  We do maintain information barriers between our aggregation units
which are designed to prevent the sharing of customer order and trade information with
individuals who are not authorized to receive and/or who have not bona fide business purpose for
accessing such data.”  Neither response was accurate with respect to direct access to the FS
Database.  VAL’s answers were materially misleading because they would lead a reasonable
investor to believe that other personnel, including proprietary traders,  were not able to see
customer trade execution information.  Customer F received VAL’s responses and used VAL’s
execution services thereafter, paying money to VAL.
5. Defendants Obtained Money or Property from the Materially False
and Misleading Statements
43. VAL obtained money or property – in the form of (i) commissions it charged on
the trades it executed on its customers’ behalf during the Relevant Period, and (ii) money it
obtained from customers by executing trades with those customers as principal – by means of its
false or materially misleading statements discussed above.  Had VAL not made and disseminated
false and misleading statements about proprietary traders’ unfettered access to the FS Database

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(which contained MNPI), and instead provided accurate disclosures regarding the access to and
controls (or lack thereof) for this MNPI, current and prospective customers may reasonably have
chosen to route their orders to a competitor for execution.
44. VFI, as the parent company, also received money or property from its false or
materially misleading statements.  VFI reports its financials on a consolidated basis that includes
VFI’s equity interests in VAL and other subsidiaries.  Consequently, VFI obtained money or
property – in the form of (i) commissions VAL charged on the trades it executed on VAL’s
customers’ behalf during the Relevant Period, and (ii) money VAL obtained from customers by
executing trades with those customers as principal – by means of VFI’s false or materially
misleading statements discussed above.  Had VFI not made and disseminated false and
misleading statements about proprietary traders’ unfettered access to the FS Database (which
contained MNPI), and instead provided accurate disclosures regarding the access to and controls
(or lack thereof) for this MNPI, current and prospective customers may reasonably have chosen
to route their orders to a competitor for execution.
45. As a result of the conduct described above, VAL and VFI violated Sections
17(a)(2) and 17(a)(3) of the Securities Act.
D. VAL Failed to Adequately Establish, Maintain, and Enforce Reasonably
Designed Information Barriers to Prevent Proprietary Traders from Misusing
Nonpublic Customer Post-Trade Information
46. Although VAL purported to establish and maintain certain policies and
procedures to prevent the misuse of MNPI generally, during the Relevant Period it failed to
establish, maintain, and enforce policies and procedures reasonably designed to do so.  As
discussed below, the controls VAL did have in place were not reasonably designed to detect or
prevent the misuse of MNPI from the FS Database.

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47. VAL had no policies or procedures that directly addressed the FS Database and
provided no training or other directives to its employees regarding the expectations for use of
that database and its highly sensitive information, including during the time period V AL was
working on remediating the system.  VFI’s Confidential Information Policy during the Relevant
Period stated that customer confidential information included “information that has been entrusted
to the Firm by clients with a reasonable expectation that the information will be kept confidential
and only shared within the company for bona-fide business purposes.”  The same policy noted that
such information could include “client orders, recently executed transactions, trading strategies,
and other forms of data.”  VAL’s Compliance Manual at the time provided that:
The Firm has established information barrier processes that are intended to
segregate information within discrete business units.  The information barrier
processes include both physical and systemic separation between business groups
so that the information possessed by one business group is not shared with other
business groups who do not have a need to know about the information.
During the Relevant Period, the information barriers described in these policies were not
reasonably designed, nor were they adequately implemented or enforced.
48. Although Defendants may have implemented information barriers for the GUI
means of accessing the FS Database, the virtually unfettered direct access method was widely
used.  Indeed, at times during the Relevant Period, the main FS Database became unresponsive
because there were too many concurrent queries being run by employees using direct access.
Due to the volume of these concurrent direct-access logins, traders complained in internal chat
messages that they ran into alerts stating that the system had exceeded the number of users
allowed.  In a June 2018 chat conversation, one proprietary trader suggested to another that they
would be less likely to run into the excessive-user message if they safeguarded the “fsviewonly”

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username and password for the backup database.  That trader quipped about the prospect of selling
“subscriptions” to the generic log-in credentials “for like a buck each.”
49. Rather than limiting the number of simultaneous logins using direct access or
disabling direct access until appropriate permissioning was implemented, VAL increased the
available number of simultaneous direct access logins in an attempt to mitigate the excessive-user
issue.  Specifically, as of November 2018, the main FS Database could be accessed simultaneously
by 75 users using direct access.  VAL increased the user limit to 125 later that month because of
complaints by traders about the concurrent capacity limits.  At that time, VAL was encouraging
employees to use direct access to obtain data from the FS Database rather than other databases
because of the merger with KCG, which significantly increased the number of employees
accessing the FS Database and the number of queries running at any given time.
1. VAL Did Not Know Who Was Using the FS Database Through
Direct Access
50. During the Relevant Period, VAL did not know which employees were using the
FS Database or in what way.  As a result, VAL lacked necessary information to test for potential
misuse of MNPI.  For example, VAL had no system in place to log or track who, or what
strategies, were querying the FS Database using direct access.    Separately, VAL had a code
repository that contained, among other things, scripts that were used to query the FS Database, but
the FS Database did not automatically capture those scripts.  Instead, the code repository
effectively operated on an honor system: the only scripts in the code repository were those a VAL
associated person actively and voluntarily deposited.  VAL had no mechanism for reviewing,
tracking, or otherwise knowing of scripts traders used but did not deposit.

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2. VAL’s Automated Systems and Policies Were Not Reasonably
Designed, Maintained, or Enforced to Detect or Prevent the Misuse of
MNPI in the FS Database
51. VAL had several automated systems and policies in place during the Relevant
Period.  However, these systems and policies were designed to detect and prevent other potential
misconduct or erroneous trading.  They were not designed, maintained, or enforced to detect and
prevent the misuse of MNPI in the FS Database, and were insufficient to do so.
52. For example, although VAL database developers had the ability to determine
which computers were connecting to the FS Database through direct access, internal chat records
demonstrate that developers sought to identify those connections only in instances when
excessive log-ins from the same computer were impacting system performance, not as a measure
to detect or prevent misuse of MNPI.  Not until the last day in February of 2019 did a VAL
database developer create a program to monitor whether any employees were querying customer
post-trade information in the FS Database – and even then, the program caused system
disruptions and was quickly terminated, meaning that it was not maintained or enforced.
53. VAL also had “lockdown systems” designed to detect abnormal trading activity
and stop strategies from trading when unexpected activity or potential logic errors were detected
based on pre-set parameters (known as “caps”).  The caps included, for example, the maximum
number of open orders, the maximum quantity of any single order placed by the strategy, or the
maximum gain or loss anticipated for the strategy.  But these systems were not designed to detect
or prevent the misuse of customers’ post-trade information; instead, they were designed to
manage risk by limiting the positions of various trading strategies and were created to address
situations that usually represent coding or configuration errors (such as “fat-finger” errors).
They did nothing to stop proprietary traders from accessing post-trade information, prevent them

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from using it as an input for trades in ways that complied with the caps, or prevent them sharing
(and trading based on) the MNPI using accounts held outside the Defendants’ operations.
54. VAL had two types of caps: (i) the “Firmwide Hardcaps,” which were set by
Virtu’s senior trading personnel in consultation with Risk Management and were hard-coded into
the trading system; and (ii) “Strategy-specific Softcaps,” which were configured by traders and
had more restrictive parameters for specific trading strategies (i.e., lower thresholds).  Once a
trader hit a Strategy-specific Softcap, a lockdown was triggered, and the Firm’s system generated
an alert and automatically locked down the strategy, thus preventing the trade from occurring.
55. However, even if a cap triggered a lockdown, traders were permitted to manually
unlock (or “reset”) the strategy after reviewing the lockdown alert, and then could resume
trading within Firmwide Hardcaps, which were higher.  The frequency with which a trader could
reset a strategy after triggering Strategy-specific Softcap lockdowns was established by
individual trading supervisors.  If a trader attempted to reset a strategy after that frequency was
exceeded, an automated alert – called a Supervisory Lockdown Alert – was generated in the
system for review by the applicable supervisor.
56. The Supervisory Lockdown Alerts were also ineffective to prevent the misuse of
MNPI in the FS Database.  For example, for the week of March 5-9, 2018, there were 1.5 million
lockdowns and resets, yet those lockdowns and resets appear to have generated only two
supervisory alerts.  Indeed, during the Relevant Period there were many millions of lockdowns
and resets, yet only 570 supervisory lockdown alerts were triggered.  Of those, 65% were
approved by the same proprietary trading supervisor, who also served as the chief compliance
officer designee tasked to review those approvals on a monthly basis.

21

57. VAL’s trainings were insufficient to prevent misuse of MNPI and were not
reasonably designed, maintained, or enforced based on the nature and scale of VAL’s business.
VAL provided a one-time training to certain employees in August 2018 on “Sensitive
Information, Information Barriers and Client Instructions.”  Among other information, it
discussed problematic conduct including “[u]sing common logins or shared passwords without
authorization from your supervisor,” and noted that “[j]ust because you can access it does not
mean that you are authorized to access/use/share it.”
58. Similarly, at a December 2018 Annual Compliance meeting, VAL reminded
employees that there is a duty to protect confidential information and discussed the importance
of adjusting information barriers when a new business line is added to the company.  Although
these trainings mentioned information barriers and protecting customer confidential information
generally, they did nothing to stop proprietary traders from accessing post-trade information if
they attempted to do so, and they did not constitute policies and procedures reasonably designed
to protect MNPI given the nature of VAL’s business.
59. Because VAL failed to establish, maintain, and enforce policies and procedures
reasonably designed to protect customers’ confidential trade execution information, VAL had no
effective way to prevent proprietary traders from accessing and using that MNPI.
60. As a result of the conduct described above, VAL violated Section 15(g) of the
Exchange Act.

22

FIRST CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(2) against VFI
61. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully
set forth herein.
62. With respect to the acts described in Paragraphs 29-  31 (November 2018 and
March 2019 Public Presentations, March 2019 Letter to Customers, and January 2019 Press
Release), VFI, directly or indirectly, by use of means or instruments of transportation or
communication in interstate commerce or by use of the mails, in the offer or sale of securities,
knowingly, recklessly, or negligently obtained money or property by means of untrue statements
of material fact, or omitted to state material facts necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading.
63. By reason of the actions alleged herein, VFI violated, and unless enjoined will
continue to violate, Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)].
SECOND CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(2) against VAL
64. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully
set forth herein.
65. With respect to the acts described in Paragraph 30 (March 2019 Letter to
Customers) and Paragraphs 37-  42 (statements to Customers B, C, D, E, and F), VAL, directly or
indirectly, by use of means or instruments of transportation or communication in interstate
commerce or by use of the mails, in the offer or sale of securities, knowingly, recklessly, or
negligently obtained money or property by means of untrue statements of material fact, or

23

omitted to state material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
66. By reason of the actions alleged herein, VAL violated, and unless enjoined will
continue to violate, Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)].
THIRD CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(3)   Against VFI
67. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully
set forth herein.
68. VFI, directly or indirectly, by use of means or instruments of transportation or
communication in interstate commerce or by use of the mails, in the offer or sale of securities,
knowingly, recklessly, or negligently engaged in transactions, practices, or courses of business
which operated or would operate as a fraud or deceit upon the purchasers of securities.
69. By reason of the actions alleged herein, VFI violated, and unless enjoined will
continue to violate, Securities Act Section 17(a)(3) [15 U.S.C. § 77q(a)(3)].
FOURTH CLAIM FOR RELIEF
Violations of Securities Act Sections 17(a)(3) Against VAL
70. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully
set forth herein.
71. VAL, directly or indirectly, by use of means or instruments of transportation or
communication in interstate commerce or by use of the mails, in the offer or sale of securities,
knowingly, recklessly, or negligently engaged in transactions, practices, or courses of business
which operated or would operate as a fraud or deceit upon the purchasers of securities.

24

72. By reason of the actions alleged herein, VAL violated, and unless enjoined will
continue to violate, Securities Act Section 17(a)(3) [15 U.S.C. § 77q(a)(3)].
FIFTH CLAIM FOR RELIEF
Violations of Exchange Act Section 15(g) Against VAL
73. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully
set forth herein.
74. VAL did not establish, maintain, and enforce written policies and procedures
reasonably designed, taking into consideration the nature of VAL’s business, to prevent the
misuse of material, nonpublic information by VAL or any person associated with VAL.
75. By reason of the actions alleged herein, VAL violated, and unless enjoined will
continue to violate, Exchange Act Section 15(g) [15 U.S.C. §78o(g)].
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court enter a judgment:
(a) finding that each Defendant violated the aforementioned provisions of the federal
securities laws as alleged herein;
(b) permanently  enjoining  each  Defendant  from  violating  Securities  Act  Sections
17(a)(2) and 17(a)(3);
(c) permanently enjoining VAL from violating Exchange Act Section 15(g);
(d) ordering each Defendant to disgorge all ill-gotten gains, plus prejudgment interest
thereon, wrongfully obtained as a result of the violations it committed;
(e) ordering each Defendant to pay civil penalties pursuant to Exchange Act Section
21(d) [15 U.S.C. § 78u(d)] and Securities Act Section 20(d) [15 U.S.C. § 77t(d)]; and

25

(f) granting  such  other  relief  to  the  Commission  as  the  Court  may  deem  just  and
proper.
1

JURY DEMAND
Plaintiff demands a trial by jury.

Dated: January 12, 2024    Respectfully submitted,

       /s/  Damon W. Taaffe
Damon W. Taaffe (admitted pro hac vice)
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Tel: (202) 551-7420
[email protected]
Of counsel:

David A. Becker
Paul Kim
Alexandra M. Arango
David Bennett
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

1
 Because VFI alone executed a tolling agreement, the Commission seeks disgorgement and civil
penalties – relief categories (d) and (e) – from VFI for all violations alleged against it, and from
VAL for all violations alleged against it occurring after September 12, 2018.  The Commission
seeks injunctive relief – categories (b) and (c) – for all alleged violations against each Defendant.

1 
 

 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 
 
  
SECURITIES AND EXCHANGE 
COMMISSION, 

 

  
Plaintiff,  

    Civil Action No. 1:23-cv-8072 (JGK) 
v.  

  
VIRTU FINANCIAL INC. and 
VIRTU AMERICAS LLC, 
 

   JURY TRIAL DEMANDED 

  
Defendants.  

  
 

AMENDED COMPLAINT 

Plaintiff Securities and Exchange Commission (“Commission”), for its Amended 

Complaint against Defendants Virtu Financial Inc. (“VFI”) and Virtu Americas LLC (“VAL”) 

(collectively “Defendants”), alleges as follows: 

SUMMARY 

1. This matter relates to false and misleading statements by Defendant VFI and its 

subsidiary VAL, an SEC registered broker-dealer that processes approximately 25% of market 

orders placed by retail investors in the U.S., and VAL’s associated failure to establish, maintain, 

and enforce policies and procedures reasonably designed to prevent the misuse of material, 

nonpublic information (“MNPI”).  

2. Defendants repeatedly – and falsely – told their institutional customers and the 

public that VAL used “information barriers” and “systemic separation between business groups” 

in order to safeguard these customers’ MNPI.  In fact, VAL did not place this information behind 

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information barriers that safeguarded MNPI.  During a 15-month period, virtually all employees 

at VAL and its affiliate broker-dealers could access MNPI regarding its customers’ trades, which 

included the name of the customer, the name of the security purchased by the customer, the side 

(buy or sell), the execution price, and the execution volume.   

3. Defendants provided access to this information, regardless of whether the 

employee had a valid business need for such information.  Such trading information, when 

collected in this form, constitutes MNPI, and access to such MNPI could be valuable to a trader.  

For example, a trader could observe that VAL had executed the orders of a large institutional 

customer throughout the day, understand that the same customer may follow a similar trading 

pattern over the next day or days, and take advantage of such information by trading ahead of the 

customer’s subsequent orders.  

4. Specifically, from at least January 2018 through April 2019 (the “Relevant 

Period”), VAL maintained a primary database for daily business operations and a backup 

database (collectively, the “FS Database”) that contained all post-trade information generated 

from VAL’s customer orders – including, among other things, specific customer-identifying 

information, the security name, the side (buy or sell), and the execution price and volume.   

5. Due to the lack of effective information barriers during the Relevant Period, 

anyone at VAL, including proprietary traders at VAL and its affiliates, was able to directly 

access the FS Database and its MNPI using a widely known and frequently shared generic 

username and password.  This was so even though VAL purported to prohibit proprietary traders 

from accessing post-trade information from VAL’s customers to prevent the risk of misconduct.  

Despite specific discussions of the deficiency occurring no later than August 13, 2018, VAL did 

not fix it until at least April 2, 2019.  

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6. During the Relevant Period, VAL made and disseminated materially misleading 

statements, and omissions which rendered other statements materially misleading, to at least six 

customers regarding the purported information barriers at VAL.  VAL’s parent, VFI, also made 

and disseminated similar materially misleading statements and omissions, which rendered other 

statements materially misleading, regarding purported information barriers in two public 

presentations and a press release.   

7. Before VAL implemented appropriate information barriers in the FS Database in 

April 2019, Defendants also issued a letter to VAL customers falsely stating that VAL 

maintained procedures to segregate and protect sensitive customer data, when VAL did not do 

so.  Throughout the Relevant Period, in addition to disseminating these materially misleading 

statements and omissions, which rendered other statements misleading, VAL and VFI took 

further steps described herein to engage in a practice or course of conduct that operated or would 

operate as a fraud or deceit upon purchasers.  Their conduct violated Sections 17(a)(2) and 

17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)(2) - (3)].   

8. VAL also failed to establish, maintain, and enforce written policies and 

procedures reasonably designed to prevent the misuse of MNPI.  This was particularly important 

given the nature of VAL’s business.  It operated both a proprietary trading business, in which it 

bought and sold securities in its own account and for its own benefit, as well as a trade execution 

business for its large institutional customers, whereby it executed buy or sell orders from 

customers, typically for a commission.   

9. Notwithstanding these dual businesses, VAL failed to establish, maintain, and 

enforce reasonably designed policies and procedures to ensure that proprietary traders at VAL 

and its affiliates could not access VAL customers’ MNPI, including by failing to impose 

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reasonable information barriers.  Indeed, VAL did not track who logged into the system that 

stored its customers’ MNPI, did not track what information was extracted from the database by 

proprietary traders, and ultimately cannot determine to this day whether its traders abused the 

trust placed in Defendants by customers who relied on them to handle their MNPI.  By failing to 

establish, maintain, and enforce policies and procedures reasonably designed to prevent the 

misuse of material nonpublic customer information, VAL’s conduct violated Section 15(g) of the 

Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §78o(g)]. 

JURISDICTION AND VENUE 

10. This Court has subject matter jurisdiction over this action pursuant to Exchange 

Act Sections 21(d) and 27 [15 U.S.C. §§§78u(d) and 78aa] and Securities Act Sections 20(b) and 

22(a) [15 U.S.C. §§77t(b) and 77v(a)].  In connection with the conduct alleged in this Amended 

Complaint, Defendants, directly or indirectly, made use of the means or instruments of 

transportation or communication in interstate commerce, or the means or instruments of 

interstate commerce, or of the mails, or of any facility of any national securities exchange. 

11. Venue is proper in this District pursuant to Exchange Act Section 27 [15 U.S.C. 

§78aa] and Securities Act Section 22 [15 U.S.C. §77v].  Certain of the acts, practices, 

transactions, and courses of business constituting the violations alleged in this Amended 

Complaint occurred within this District.  As noted in the subsequent paragraphs, Defendants’ 

executive offices are located within this District.   

DEFENDANTS 

12. VFI is a Delaware corporation headquartered in New York, New York.  VFI’s 

common stock is registered pursuant to Section 12(b) of the Exchange Act.  VFI’s common stock 

trades on the NASDAQ.   

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13. VAL is a Delaware limited liability company with principal executive offices in 

New York, New York.  It is a broker-dealer registered with the Commission.  VAL is a 

subsidiary of VFI and was previously known as KCG Americas LLC prior to VFI’s acquisition 

of KCG Holdings, Inc. in July 2017.   

FACTUAL ALLEGATIONS 

A.  VAL and Affiliates’ Proprietary Trading and Trade Execution Businesses 

14. VAL and its affiliates were SEC-registered broker-dealers that operated two 

distinct types of businesses: (i) customer-facing trade execution services, which generate MNPI 

regarding customers’ trade orders and executions; and (ii) proprietary trading operations, which 

must be prevented from misusing that same MNPI when trading on VAL’s or its affiliates’ 

behalf.   

15. Because the federal securities laws require broker-dealers to implement and 

maintain policies and procedures reasonably designed to prevent the misuse of MNPI, VAL 

purported to maintain information barriers, which are a standard method used by broker-dealers 

and other financial institutions to prevent the use of MNPI, by VAL and its associated persons.  

As detailed below, following an acquisition that required combining new trade execution 

services with existing proprietary trading operations, VAL’s failure to implement reasonably 

designed information barriers meant that proprietary traders had essentially unfettered access to 

its customers’ MNPI for approximately 15 months.     

B. Relevant Background on and Operation of the FS Database 

1. Pre-KCG Acquisition 

16. In July 2017, VFI acquired KCG Holdings, Inc. (“KCG”), which owned a broker-

dealer firm with a large trade execution business.  Prior to the KCG acquisition, VFI’s operating 

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subsidiaries (collectively “Legacy Virtu”) primarily bought and sold securities in Legacy Virtu’s 

own account and for its own benefit.  Legacy Virtu maintained the FS Database for its daily 

business operations, and it recorded information regarding its trades into the database seconds or 

milliseconds post execution.   

17. Before the KCG acquisition (and continuing thereafter), Legacy Virtu’s 

employees could access the FS Database through two means.   

18. First, an employee could log into a graphical user interface (“GUI”).  Employees 

accessing the FS Database via the GUI were required to enter their unique log-in credentials and 

could access only information necessary for their role at the firm – a process typically known as 

“permissioning.”   

19. Second, an employee could log into the FS Database directly using a username 

and password, a technique that allowed them to search the database.  These usernames and 

passwords were not specific to individual employees; instead, employees used the generic 

“viewonly” as both username and password.  Similarly, employees could access the backup FS 

Database using the generic “fsviewonly” as both username and password.  Users accessing the 

FS Database this way could access all data in it, regardless of their role at the firm or business 

need.  Before the KCG Acquisition, Legacy Virtu did not have a significant trade execution 

business, so the lack of information barriers did not result in the risk that Legacy Virtu’s 

proprietary traders would access customer MNPI. 

2. Post-KCG Acquisition 

20. In July 2017, VFI acquired KCG and formed VAL, which mainly operated the 

customer-facing trade execution business acquired from KCG, and some of KCG’s proprietary 

trading business.  This newly acquired trade execution business meant that VAL bought and sold 

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orders for large institutional customers.  Customers typically paid a commission to VAL each 

time they executed a trade using its execution services.  No later than January 2018, VAL began 

storing sensitive customer trade execution information in the FS Database, which also continued 

to house Legacy Virtu proprietary trade data. 

21. Under VAL’s policies and procedures at the time, proprietary traders were 

supposed to be walled off from access to certain customer trade details (from the trade execution 

business) to prevent them from having access to MNPI that could potentially provide them a 

trading advantage.  But, despite its recognition of the need for such policies and procedures, 

VAL failed to implement and enforce them with respect to direct access to the FS Database, one 

of the primary means of accessing MNPI. 

22. VAL’s customer trade execution data that were entered into the FS Database 

constituted MNPI.  The “consolidated tape,” a high-speed electronic system that reports the latest 

price and volume data on sales of exchange-listed stocks, publicly reports in real-time a subset of 

the trade information contained in the FS Database.  It does not, however, provide critical additional 

details that are in the FS Database, namely specific customer identifying information along with 

the side (buy or sell), the security, price, volume, and the trading algorithm used for each order.   

23. Despite compiling this sensitive customer data in its FS Database, VAL did not 

review or update the permissioning for direct access to the database to prevent access to 

customer post-trade information by employees who did not have a business need to access that 

data.  Because the generic usernames and passwords for direct access were widely known and 

shared, virtually all employees, including VAL and Legacy Virtu proprietary traders, effectively 

had unrestricted access to the MNPI in the FS Database.  

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24. During the Relevant Period, proprietary traders at VAL and Legacy Virtu had 

expertise in creating trading algorithms, known as “strategies,” that aim to improve trading 

revenues.  Each trading strategy was typically automated to incorporate a series of instructions 

and data, some of which came from the FS Database.  VAL and Legacy Virtu had hundreds of 

thousands of individual strategies or instances of strategies that ran on a daily basis as part of the 

proprietary trading business, and many relied on the direct-access method, with its generic 

“viewonly” or “fsviewonly” login credentials, to source data from the FS Database.   

25. In approximately August 2018, VAL’s database developers started to discuss a 

need to improve the inadequate permissioning for the FS Database, apparently as a result of the 

due diligence process for VFI’s pending acquisition of Investment Technology Group, Inc. 

(“ITG”), another broker-dealer.  On August 13, 2018, over 20 employees from different 

departments at Legacy Virtu received an email indicating that the FS Database needed a 

“revamp” to remediate the permissioning and thus were put on notice.  In December 2018, the 

topic of remediating the database resurfaced and the main database developer commented, “I was 

going to start on it this week but have been side tracked.” 

26. Nevertheless, despite developers and others becoming aware no later than August 

2018 that proprietary traders had access to customers’ post-trade MNPI, VAL took no immediate 

steps to mitigate the risk of misuse of the MNPI.  Instead, VAL continued for another eight 

months to enter customer post-trade information into the FS Database, continued to allow direct 

access to such information with the generic login credentials, and issued no statements, 

directives, or guidance to proprietary traders that they should cease or limit their direct access to 

the FS Database.  During that period – in which VAL handled approximately 25% of all market 

orders placed by retail investors in the U.S. – its failure to fix the problem perpetuated the 

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substantial risk (present since at least January 2018) that proprietary traders could access and 

misuse the MNPI. 

27. The customer-specific, and virtually real-time, post-trade information contained in 

the FS Database would be valuable to a proprietary trader because it would, among other things, 

provide insights into which VAL customers were trading in the market (and in what securities) at 

present, as well as the direction and size of each customer’s order flow.  Additionally, because 

large orders by VAL’s institutional customers could be broken up into smaller orders placed over 

one day or several days, such post-trade information could provide further material, nonpublic 

insight into orders that may be forthcoming in a particular security. 

C. Defendants Made and Disseminated Materially False and Misleading 
Statements, and Omissions Which Rendered other Statements Materially 
Misleading, to Customers and the Public Regarding VAL’s Information 
Barriers 

28. Defendants made and disseminated a series of false and misleading statements 

and omissions, which rendered other statements materially misleading, to customers and the 

public regarding VAL’s purported information barriers.  These statements and omissions were 

material because a reasonable investor-customer would have relied on them when selecting VAL 

to execute its trades.  Even after internal discussions about the need to remediate the 

permissioning deficiencies, Defendants failed to correct or clarify the false or misleading 

statements. 

1. November 2018 and March 2019 Public Presentations 

29.   In presentations on November 7, 2018 and March 13, 2019, VFI made and 

disseminated materially misleading statements and omissions, which rendered other statements 

materially misleading, to actual and potential customers and investors.  Both presentations stated 

that “Virtu has established policies and procedures designed to safeguard sensitive client 

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information” including “[t]echnology access controls to segregate sensitive information” and 

“[r]eview of approved personnel and permissions.”  During the November 2018 earnings call and 

presentation, VFI’s CEO reiterated these statements to the public:  

You see the importance we place on protecting client information in all aspects of 
our business.  We take this obligation seriously and we recognize and appreciate 
the natural concerns customers will no doubt have.  Virtu has established policies 
and procedures for our existing client and market-making businesses that are 
designed to safeguard sensitive client information and will continue to design our 
policies and procedures with our clients in mind.  These safeguards include 
physical separation, logical access control and entitlement reviews.   

(Emphasis added.)  These statements were false and materially misleading because the 

assurances of “logical access control and entitlement reviews” failed to reference – and were 

wholly at odds with – the direct access permissioning issues for the FS Database, including 

Defendants’ failure to review or update the permissioning for the FS Database to prevent access 

by employees who did not have a business need-to-know, as described in detail above.  The 

statements misled Defendants’ customers and the public into believing that Defendants’ policies 

and procedures to safeguard customers’ MNPI were effective, enforced, and applicable to all 

means of accessing the information.  The statements were material because a reasonable investor 

would have relied on them when selecting VAL to execute its trades.   

2. March 2019 Letter to Customers   

30. On or around March 1, 2019, Defendants made and widely disseminated 

materially misleading statements in a letter to existing VAL customers regarding the ITG 

merger.  Certain customers received the letter from the CEO’s “virtu.com” email address.  

Others received the letter as a PDF attachment to an email which contained the “Virtu Financial” 

logo.  Both versions were signed by VFI’s CEO and stated: “Prior to merging both Virtu and 

ITG each maintained our own procedures to segregate and protect sensitive client data.”  This 

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statement was materially misleading because it omitted the availability of direct access to the FS 

Database by Defendants’ proprietary traders without appropriate permissioning.  At certain large 

customers, multiple employees received the same emailed letter.  For example, at one customer, 

eight of its employees separately received the emailed letter. 

3. January 2019 Press Release 

31. In a January 25, 2019 press release, VFI made and disseminated a similar 

materially false and misleading statement.  In providing an update regarding the acquisition of 

ITG, the press release stated, “Post closing, Virtu intends to continue to maintain and enforce 

appropriate information barriers to segment and protect sensitive client data.”  The statement was 

misleading because at the time, VAL failed to adequately implement and enforce its information 

barriers as to the direct access permissioning of the FS Database, allowing access to any 

employee with the widely shared generic username and password to access sensitive client data.  

The statement was material because a reasonable investor would have relied on it when selecting 

VAL to execute its trades. 

4. Responses to Customer Due Diligence Questionnaires   

32. Customers of VAL’s execution services periodically sent VAL due diligence 

questionnaires for VAL to complete and return.  Customers used these questionnaires to evaluate 

or reevaluate whether VAL should be an approved broker-dealer for executing their orders.  

Some of the questionnaires included specific questions about VAL’s information barriers and 

access controls in place to protect customer trade information, including post-trade information.  

VAL’s compliance department typically received input from multiple departments to respond to 

the questionnaires.   

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33. During the Relevant Period, VAL made and disseminated materially false and 

misleading statements, and omissions which rendered other statements materially misleading, 

concerning its handling of customer information and information barriers when responding to at 

least six customer questionnaires.  These statements were false and misleading because they 

failed to reference – and were wholly at odds with – the reality of the direct access permissioning 

described in detail above.  They would mislead reasonable investors into believing that 

Defendants’ policies and procedures were designed to safeguard MNPI and were effective, 

enforced, and applicable to all means of accessing the information.   

34. VAL’s statements were material because as noted above, the questionnaires were 

used to evaluate or reevaluate whether VAL should be an approved broker-dealer to handle 

customer orders, and a reasonable investor would have relied on them when selecting VAL to 

execute its trades.  Although VAL had identified the direct access permissioning issue on or 

before August 13, 2018, VAL did not take steps to inform its customers of that permissioning 

issue, even while it was in the process of being remediated.   

35. These misstatements were also material to customers’ decision whether to route 

their orders to VAL.  VAL’s customers consider their post-trade information sensitive, 

nonpublic, and material, and are concerned that this information could be used to engage in 

trading abuses including front-running if their information is not adequately protected.   

36. In a January 2019 questionnaire, an investment adviser customer (“Customer A”) 

asked VAL: “Do any cash traders, research sales and/or proprietary traders see electronic order 

flow information, whether this is intraday or post-trade?  What safeguards do you have in place 

to maintain the confidentiality of our order flow?” VAL misleadingly responded: “No. The Firm 

employs information barrier processes and procedures as part of its oversight functions, such as 

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procedures to approve and review systems entitlements for all of the Firm’s business units, 

including Electronic Execution Services.”  These statements were materially false and 

misleading because VAL did not employ reasonable, meaningful information barrier processes 

with respect to direct access to the FS Database, and thus Defendants’ proprietary traders (and 

others) in fact did have access to electronic post-trade order information.  Moreover, the shared 

usernames and passwords, by their nature, bypassed any requirements to approve or review 

system entitlements. 

37. In another January 2019 questionnaire, an investment adviser customer 

(“Customer B”) asked what policies and procedures VAL had in place to protect “client 

confidential information.”  VAL misleadingly responded that it had “encryption/password 

protection” and “access controls” in place.  These statements were materially false and 

misleading because, for the reasons described throughout, the confidential information in the FS 

Database did not have adequate password protection and there were no reasonable, meaningful 

access controls in place for direct access.  Customer B received VAL’s responses and used 

VAL’s execution services thereafter, paying money to VAL.   

38. In a November 2018 questionnaire, an investment adviser customer (“Customer 

C”) asked who at VAL had access to “real-time and post trade” information (emphasis added).  

In its response, VAL listed certain categories of employees who had access to Customer C’s 

post-trade information, but failed to include others on that list, including proprietary traders, who 

could access the very same information through direct access to the FS Database:  “Electronic 

Execution Services Sales and supervisory personnel as well as certain support personnel in 

technology, operations, finance, compliance and legal may have access to systems containing 

[Customer C’s] post trade information.”   

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39. Moreover, VAL responded to Customer C that it “employs information barrier 

processes and procedures as part of its oversight functions, which include processes to approve 

and review systems entitlements for the Firm’s business units.”  VAL repeated the same sentence 

in a separate question that asked about “oversight” at VAL.  These statements were materially 

misleading because they falsely implied that the systems entitlements for the FS Database were 

subject to ongoing review and approval, when in fact there were no reasonable, meaningful 

systems entitlements in place for direct access to the FS Database throughout the relevant period 

beyond the generic and widely shared “viewonly” credentials.  Customer C received VAL’s 

responses and continued to use VAL’s execution services thereafter, paying money to VAL.   

40. In an August 2018 questionnaire, an investment adviser customer (“Customer D”) 

asked VAL to confirm that “[o]nly employees with a need to access confidential information in 

order to provide required services have access to such confidential information.”  VAL falsely 

replied “Yes.”  This statement was materially false and misleading because virtually any 

employee, including proprietary traders, could access the FS Database via direct access.  

Customer D received VAL’s responses and used VAL’s execution services thereafter, paying 

money to VAL.   

41. In a July 2018 questionnaire, an investment adviser customer (“Customer E”) 

asked about changes or violations to the firm’s privacy policy, to which VAL inaccurately 

answered that it “maintains information barrier policies and procedures that are designed to 

segregate client orders to those business units within the firm that have a need to know of the 

information.”  This statement was materially false and misleading because business units within 

VAL or Legacy Virtu that did not have a need to know of customer information nevertheless 

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could access the information in the FS Database via direct access.  Customer E received VAL’s 

responses and used VAL’s execution services thereafter, paying money to VAL. 

42. In a March 2018 questionnaire, an investment adviser customer (“Customer F”) 

asked who at VAL had access to its information.  VAL misleadingly responded, “Our policies 

provide that only personnel whose job function requires access to real time and historical order 

and execution information are permissioned to see this information.”  VAL stated that those 

personnel “currently consist[] of the business supervisors, client service personnel, risk 

management, sales coverage, compliance and other similar personnel with a bona fide business 

need to know such information.” Customer F also asked about information barriers specifically, 

to which VAL responded, “We do maintain information barriers between our aggregation units 

which are designed to prevent the sharing of customer order and trade information with 

individuals who are not authorized to receive and/or who have not bona fide business purpose for 

accessing such data.”  Neither response was accurate with respect to direct access to the FS 

Database.  VAL’s answers were materially misleading because they would lead a reasonable 

investor to believe that other personnel, including proprietary traders, were not able to see 

customer trade execution information.  Customer F received VAL’s responses and used VAL’s 

execution services thereafter, paying money to VAL.   

5. Defendants Obtained Money or Property from the Materially False 
and Misleading Statements 

43. VAL obtained money or property – in the form of (i) commissions it charged on 

the trades it executed on its customers’ behalf during the Relevant Period, and (ii) money it 

obtained from customers by executing trades with those customers as principal – by means of its 

false or materially misleading statements discussed above.  Had VAL not made and disseminated 

false and misleading statements about proprietary traders’ unfettered access to the FS Database 

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(which contained MNPI), and instead provided accurate disclosures regarding the access to and 

controls (or lack thereof) for this MNPI, current and prospective customers may reasonably have 

chosen to route their orders to a competitor for execution.   

44. VFI, as the parent company, also received money or property from its false or 

materially misleading statements.  VFI reports its financials on a consolidated basis that includes 

VFI’s equity interests in VAL and other subsidiaries.  Consequently, VFI obtained money or 

property – in the form of (i) commissions VAL charged on the trades it executed on VAL’s 

customers’ behalf during the Relevant Period, and (ii) money VAL obtained from customers by 

executing trades with those customers as principal – by means of VFI’s false or materially 

misleading statements discussed above.  Had VFI not made and disseminated false and 

misleading statements about proprietary traders’ unfettered access to the FS Database (which 

contained MNPI), and instead provided accurate disclosures regarding the access to and controls 

(or lack thereof) for this MNPI, current and prospective customers may reasonably have chosen 

to route their orders to a competitor for execution.   

45. As a result of the conduct described above, VAL and VFI violated Sections 

17(a)(2) and 17(a)(3) of the Securities Act. 

D. VAL Failed to Adequately Establish, Maintain, and Enforce Reasonably 
Designed Information Barriers to Prevent Proprietary Traders from Misusing 
Nonpublic Customer Post-Trade Information 

46. Although VAL purported to establish and maintain certain policies and 

procedures to prevent the misuse of MNPI generally, during the Relevant Period it failed to 

establish, maintain, and enforce policies and procedures reasonably designed to do so.  As 

discussed below, the controls VAL did have in place were not reasonably designed to detect or 

prevent the misuse of MNPI from the FS Database.     

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47. VAL had no policies or procedures that directly addressed the FS Database and 

provided no training or other directives to its employees regarding the expectations for use of 

that database and its highly sensitive information, including during the time period VAL was 

working on remediating the system.  VFI’s Confidential Information Policy during the Relevant 

Period stated that customer confidential information included “information that has been entrusted 

to the Firm by clients with a reasonable expectation that the information will be kept confidential 

and only shared within the company for bona-fide business purposes.”  The same policy noted that 

such information could include “client orders, recently executed transactions, trading strategies, 

and other forms of data.”  VAL’s Compliance Manual at the time provided that:  

The Firm has established information barrier processes that are intended to 
segregate information within discrete business units.  The information barrier 
processes include both physical and systemic separation between business groups 
so that the information possessed by one business group is not shared with other 
business groups who do not have a need to know about the information. 

During the Relevant Period, the information barriers described in these policies were not 

reasonably designed, nor were they adequately implemented or enforced. 

48. Although Defendants may have implemented information barriers for the GUI 

means of accessing the FS Database, the virtually unfettered direct access method was widely 

used.  Indeed, at times during the Relevant Period, the main FS Database became unresponsive 

because there were too many concurrent queries being run by employees using direct access.  

Due to the volume of these concurrent direct-access logins, traders complained in internal chat 

messages that they ran into alerts stating that the system had exceeded the number of users 

allowed.  In a June 2018 chat conversation, one proprietary trader suggested to another that they 

would be less likely to run into the excessive-user message if they safeguarded the “fsviewonly” 

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username and password for the backup database.  That trader quipped about the prospect of selling 

“subscriptions” to the generic log-in credentials “for like a buck each.”  

49. Rather than limiting the number of simultaneous logins using direct access or 

disabling direct access until appropriate permissioning was implemented, VAL increased the 

available number of simultaneous direct access logins in an attempt to mitigate the excessive-user 

issue.  Specifically, as of November 2018, the main FS Database could be accessed simultaneously 

by 75 users using direct access.  VAL increased the user limit to 125 later that month because of 

complaints by traders about the concurrent capacity limits.  At that time, VAL was encouraging 

employees to use direct access to obtain data from the FS Database rather than other databases 

because of the merger with KCG, which significantly increased the number of employees 

accessing the FS Database and the number of queries running at any given time. 

1. VAL Did Not Know Who Was Using the FS Database Through    
Direct Access 

50. During the Relevant Period, VAL did not know which employees were using the 

FS Database or in what way.  As a result, VAL lacked necessary information to test for potential 

misuse of MNPI.  For example, VAL had no system in place to log or track who, or what 

strategies, were querying the FS Database using direct access.  Separately, VAL had a code 

repository that contained, among other things, scripts that were used to query the FS Database, but 

the FS Database did not automatically capture those scripts.  Instead, the code repository 

effectively operated on an honor system: the only scripts in the code repository were those a VAL 

associated person actively and voluntarily deposited.  VAL had no mechanism for reviewing, 

tracking, or otherwise knowing of scripts traders used but did not deposit.   

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2. VAL’s Automated Systems and Policies Were Not Reasonably 
Designed, Maintained, or Enforced to Detect or Prevent the Misuse of 
MNPI in the FS Database 

51. VAL had several automated systems and policies in place during the Relevant 

Period.  However, these systems and policies were designed to detect and prevent other potential 

misconduct or erroneous trading.  They were not designed, maintained, or enforced to detect and 

prevent the misuse of MNPI in the FS Database, and were insufficient to do so. 

52. For example, although VAL database developers had the ability to determine 

which computers were connecting to the FS Database through direct access, internal chat records 

demonstrate that developers sought to identify those connections only in instances when 

excessive log-ins from the same computer were impacting system performance, not as a measure 

to detect or prevent misuse of MNPI.  Not until the last day in February of 2019 did a VAL 

database developer create a program to monitor whether any employees were querying customer 

post-trade information in the FS Database – and even then, the program caused system 

disruptions and was quickly terminated, meaning that it was not maintained or enforced. 

53. VAL also had “lockdown systems” designed to detect abnormal trading activity 

and stop strategies from trading when unexpected activity or potential logic errors were detected 

based on pre-set parameters (known as “caps”).  The caps included, for example, the maximum 

number of open orders, the maximum quantity of any single order placed by the strategy, or the 

maximum gain or loss anticipated for the strategy.  But these systems were not designed to detect 

or prevent the misuse of customers’ post-trade information; instead, they were designed to 

manage risk by limiting the positions of various trading strategies and were created to address 

situations that usually represent coding or configuration errors (such as “fat-finger” errors).  

They did nothing to stop proprietary traders from accessing post-trade information, prevent them 

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from using it as an input for trades in ways that complied with the caps, or prevent them sharing 

(and trading based on) the MNPI using accounts held outside the Defendants’ operations.   

54. VAL had two types of caps: (i) the “Firmwide Hardcaps,” which were set by 

Virtu’s senior trading personnel in consultation with Risk Management and were hard-coded into 

the trading system; and (ii) “Strategy-specific Softcaps,” which were configured by traders and 

had more restrictive parameters for specific trading strategies (i.e., lower thresholds).  Once a 

trader hit a Strategy-specific Softcap, a lockdown was triggered, and the Firm’s system generated 

an alert and automatically locked down the strategy, thus preventing the trade from occurring.   

55. However, even if a cap triggered a lockdown, traders were permitted to manually 

unlock (or “reset”) the strategy after reviewing the lockdown alert, and then could resume 

trading within Firmwide Hardcaps, which were higher.  The frequency with which a trader could 

reset a strategy after triggering Strategy-specific Softcap lockdowns was established by 

individual trading supervisors.  If a trader attempted to reset a strategy after that frequency was 

exceeded, an automated alert – called a Supervisory Lockdown Alert – was generated in the 

system for review by the applicable supervisor. 

56. The Supervisory Lockdown Alerts were also ineffective to prevent the misuse of 

MNPI in the FS Database.  For example, for the week of March 5-9, 2018, there were 1.5 million 

lockdowns and resets, yet those lockdowns and resets appear to have generated only two 

supervisory alerts.  Indeed, during the Relevant Period there were many millions of lockdowns 

and resets, yet only 570 supervisory lockdown alerts were triggered.  Of those, 65% were 

approved by the same proprietary trading supervisor, who also served as the chief compliance 

officer designee tasked to review those approvals on a monthly basis.   

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57. VAL’s trainings were insufficient to prevent misuse of MNPI and were not 

reasonably designed, maintained, or enforced based on the nature and scale of VAL’s business.  

VAL provided a one-time training to certain employees in August 2018 on “Sensitive 

Information, Information Barriers and Client Instructions.”  Among other information, it 

discussed problematic conduct including “[u]sing common logins or shared passwords without 

authorization from your supervisor,” and noted that “[j]ust because you can access it does not 

mean that you are authorized to access/use/share it.”   

58. Similarly, at a December 2018 Annual Compliance meeting, VAL reminded 

employees that there is a duty to protect confidential information and discussed the importance 

of adjusting information barriers when a new business line is added to the company.  Although 

these trainings mentioned information barriers and protecting customer confidential information 

generally, they did nothing to stop proprietary traders from accessing post-trade information if 

they attempted to do so, and they did not constitute policies and procedures reasonably designed 

to protect MNPI given the nature of VAL’s business.   

59. Because VAL failed to establish, maintain, and enforce policies and procedures 

reasonably designed to protect customers’ confidential trade execution information, VAL had no 

effective way to prevent proprietary traders from accessing and using that MNPI.  

60. As a result of the conduct described above, VAL violated Section 15(g) of the 

Exchange Act.   

  

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FIRST CLAIM FOR RELIEF 

Violations of Securities Act Section 17(a)(2) against VFI  

61. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully 

set forth herein. 

62. With respect to the acts described in Paragraphs 29-31 (November 2018 and 

March 2019 Public Presentations, March 2019 Letter to Customers, and January 2019 Press 

Release), VFI, directly or indirectly, by use of means or instruments of transportation or 

communication in interstate commerce or by use of the mails, in the offer or sale of securities, 

knowingly, recklessly, or negligently obtained money or property by means of untrue statements 

of material fact, or omitted to state material facts necessary in order to make the statements 

made, in light of the circumstances under which they were made, not misleading.     

63. By reason of the actions alleged herein, VFI violated, and unless enjoined will 

continue to violate, Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)]. 

SECOND CLAIM FOR RELIEF 

Violations of Securities Act Section 17(a)(2) against VAL 

64. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully 

set forth herein. 

65. With respect to the acts described in Paragraph 30 (March 2019 Letter to 

Customers) and Paragraphs 37-42 (statements to Customers B, C, D, E, and F), VAL, directly or 

indirectly, by use of means or instruments of transportation or communication in interstate 

commerce or by use of the mails, in the offer or sale of securities, knowingly, recklessly, or 

negligently obtained money or property by means of untrue statements of material fact, or 

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omitted to state material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading.   

66. By reason of the actions alleged herein, VAL violated, and unless enjoined will 

continue to violate, Securities Act Section 17(a)(2) [15 U.S.C. § 77q(a)(2)]. 

THIRD CLAIM FOR RELIEF 

Violations of Securities Act Section 17(a)(3) Against VFI 

67. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully 

set forth herein. 

68. VFI, directly or indirectly, by use of means or instruments of transportation or 

communication in interstate commerce or by use of the mails, in the offer or sale of securities, 

knowingly, recklessly, or negligently engaged in transactions, practices, or courses of business 

which operated or would operate as a fraud or deceit upon the purchasers of securities.   

69. By reason of the actions alleged herein, VFI violated, and unless enjoined will 

continue to violate, Securities Act Section 17(a)(3) [15 U.S.C. § 77q(a)(3)]. 

FOURTH CLAIM FOR RELIEF 

Violations of Securities Act Sections 17(a)(3) Against VAL 

70. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully 

set forth herein. 

71. VAL, directly or indirectly, by use of means or instruments of transportation or 

communication in interstate commerce or by use of the mails, in the offer or sale of securities, 

knowingly, recklessly, or negligently engaged in transactions, practices, or courses of business 

which operated or would operate as a fraud or deceit upon the purchasers of securities.   

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72. By reason of the actions alleged herein, VAL violated, and unless enjoined will 

continue to violate, Securities Act Section 17(a)(3) [15 U.S.C. § 77q(a)(3)]. 

FIFTH CLAIM FOR RELIEF 

Violations of Exchange Act Section 15(g) Against VAL 

73. The Commission realleges and reincorporates Paragraphs 1 through 60 as if fully 

set forth herein. 

74. VAL did not establish, maintain, and enforce written policies and procedures 

reasonably designed, taking into consideration the nature of VAL’s business, to prevent the 

misuse of material, nonpublic information by VAL or any person associated with VAL. 

75. By reason of the actions alleged herein, VAL violated, and unless enjoined will 

continue to violate, Exchange Act Section 15(g) [15 U.S.C. §78o(g)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court enter a judgment: 

(a) finding that each Defendant violated the aforementioned provisions of the federal 

securities laws as alleged herein; 

(b) permanently enjoining each Defendant from violating Securities Act Sections 

17(a)(2) and 17(a)(3); 

(c) permanently enjoining VAL from violating Exchange Act Section 15(g);  

(d) ordering each Defendant to disgorge all ill-gotten gains, plus prejudgment interest 

thereon, wrongfully obtained as a result of the violations it committed; 

(e) ordering each Defendant to pay civil penalties pursuant to Exchange Act Section 

21(d) [15 U.S.C. § 78u(d)] and Securities Act Section 20(d) [15 U.S.C. § 77t(d)]; and 

  

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(f) granting such other relief to the Commission as the Court may deem just and 

proper.1 

JURY DEMAND 

Plaintiff demands a trial by jury. 

 

 
Dated: January 12, 2024    Respectfully submitted,  

  
       /s/ Damon W. Taaffe       

Damon W. Taaffe (admitted pro hac vice) 
U.S. Securities and Exchange Commission 
100 F Street, N.E.  
Washington, DC 20549 
Tel: (202) 551-7420 
[email protected]  

Of counsel: 
 
David A. Becker 
Paul Kim 
Alexandra M. Arango 
David Bennett 
U.S. Securities and Exchange Commission  
100 F Street, N.E. 
Washington, D.C. 20549 

 
 

1 Because VFI alone executed a tolling agreement, the Commission seeks disgorgement and civil 
penalties – relief categories (d) and (e) – from VFI for all violations alleged against it, and from 
VAL for all violations alleged against it occurring after September 12, 2018.  The Commission 
seeks injunctive relief – categories (b) and (c) – for all alleged violations against each Defendant. 

Case 1:23-cv-08072-JGK   Document 28   Filed 01/12/24   Page 25 of 25


	AMENDED COMPLAINT
	SUMMARY
	JURISDICTION AND VENUE
	DEFENDANTS
	FACTUAL ALLEGATIONS
	A.  VAL and Affiliates’ Proprietary Trading and Trade Execution Businesses
	B. Relevant Background on and Operation of the FS Database
	C. Defendants Made and Disseminated Materially False and Misleading Statements, and Omissions Which Rendered other Statements Materially Misleading, to Customers and the Public Regarding VAL’s Information Barriers
	D. VAL Failed to Adequately Establish, Maintain, and Enforce Reasonably Designed Information Barriers to Prevent Proprietary Traders from Misusing Nonpublic Customer Post-Trade Information
	1. VAL Did Not Know Who Was Using the FS Database Through    Direct Access
	2. VAL’s Automated Systems and Policies Were Not Reasonably Designed, Maintained, or Enforced to Detect or Prevent the Misuse of MNPI in the FS Database


	FIRST CLAIM FOR RELIEF
	Violations of Securities Act Section 17(a)(2) against VFI
	SECOND CLAIM FOR RELIEF
	Violations of Securities Act Section 17(a)(2) against VAL
	THIRD CLAIM FOR RELIEF
	Violations of Securities Act Section 17(a)(3) Against VFI
	FOURTH CLAIM FOR RELIEF
	Violations of Securities Act Sections 17(a)(3) Against VAL
	FIFTH CLAIM FOR RELIEF
	Violations of Exchange Act Section 15(g) Against VAL
	PRAYER FOR RELIEF
	JURY DEMAND