SEC v. LavaFlow, Inc. (2014)

Settled

✓ Checked against the primary document on October 3, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, with sampled and disputed records read a second time. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.

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In July 2014 the Securities and Exchange Commission settled an administrative order with LavaFlow, finding that the ECN it operated failed to protect subscribers' confidential order information. The order imposes a $2.85 million penalty, $1.8 million disgorgement and $350,000 interest.

The record

What was ordered

Civil penalty

$2.9m

Disgorgement

$1.8m

Prejudgment interest

$350k

Total relief

$5m

Alleged gain

—

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars.

What is alleged to have happened

The Securities and Exchange Commission announced this matter on July 25, 2014 as release 34-72673. The respondents named are LavaFlow, Inc. (0 individuals, 1 entity).

The order finds LavaFlow breached Regulation ATS Rules 301(b)(10) and 301(b)(2) between 2008 and 2011 by letting its ColorBook smart order router see non-displayed subscriber order flow.

This library does not tag the matter to a manipulation technique. The matter concerns the handling of confidential order information on an alternative trading system and has no short-selling element.

The relief recorded in our data is a civil penalty of $2,850,000, disgorgement of $1,800,000 and prejudgment interest of $350,000. Penalty and disgorgement are distinct: disgorgement returns the gain, while the penalty is punitive. We store them separately so that aggregate figures across the library are not double-counted.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the release.

Timeline

1. 2014-07-25 Administrative proceeding instituted (cease-and-desist)

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEC order

The linked release is a work of the United States government and is not subject to copyright. Our summary and narrative above are our own writing.

Record added September 10, 2026. submit a correction.