AQR Fires Head Trader Linked to ITG Dark Pool Trading Scandal

Aug 13 2015 | 1:39pm ET

Hedge fund AQR Capital Management has terminated its head trader over his alleged involvement in improper trading at his former employer.

Hitesh Mittal had voluntarily taken a paid leave of absence from the $136 billion asset manager in July amid a regulatory investigation of Investment Technology Group’s (ITG) dark pool. He was let go on August 9, according to an AQR statement.

Mittal, who joined AQR in 2012 and became global head of trading in 2013, worked at ITG between 2001 and late 2011. He was ITG’s head of liquidity management during the period referenced in the SEC’s investigation, building out its algorithmic trading capabilities and managing ITG’s well-known crossing network POSIT.

ITG settled the SEC charges for $20.3 million in fines, interest and profit disgorgement related to the activities of an ITG market-making division that allegedly traded using information not available to other customers of ITG’s or private stock-trading system in 2009-11.

The investigation was focused on a secret ITG trading program, code-named Project Omega, which relied on improperly accessing client data from live streams created to help investors trade orders in both listed markets and ITG's dark pool. The company reportedly earned more than $2 million on the frontrunning program, which formally ceased in July 2011, on trades amounting to more than 1.3 billion shares.

The fine was a record for a private stock-trading platform in the U.S.

Mittal has not been not formally charged by regulators in the investigation. However, the SEC settlement references a “ITG senior executive" and who held the title of head of liquidity management as being in charge of implementing Project Omega.

In the meantime, regulators continue to investigate trading associated with dark pools. Both Credit Suisse, which runs the largest dark pool in the U.S., and Barclays are reportedly in settlement discussions with both the SEC and New York Attorney General related to dark pool trading activities.

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