Deutsche Bank agreed to pay $37 million in fines to settle (SEC and New York Attorney General) charges that it misled clients about the performance of a core feature of its automated order router that primarily sent client orders to dark pools.

According to the SEC’s order, Deutsche Bank made materially misleading statements and omissions concerning the Dark Pool Ranking Model feature of one of its order routers, known as SuperX+.  The Dark Pool Ranking Model was intended to measure execution quality and liquidity of venues to which it sent orders - and that information was supposed to be used to “smartly [route and select] optimal pools of liquidity on an order by order basis.” 

But a coding error caused at least 2 dark pools to receive inflated rankings and consequently millions of orders that SuperX+ would have sent elsewhere if the system was operating the way Deutsche Bank had described.  The SEC’s order also found that Deutsche Bank manually overrode the rankings on certain occasions and manually assigned fill rates for new venues based on subjective judgment that that turned out to be inconsistent with the venues’ actual performance.