Virtu Financial: Executives Purchase Shares Amid Regulatory Lawsuit

Market maker Virtu Financial (ticker: VIRT) experienced a significant drop in its share price following the announcement of a regulatory lawsuit. However, in a display of confidence, the company’s CEO and another top executive purchased shares on the open market.

On September 12, after the market closed, Virtu revealed that the Securities and Exchange Commission (SEC) had filed a lawsuit against the company. The SEC alleges that Virtu misled customers regarding the protection of their confidential trading data. Specifically, the lawsuit suggests that a potential vulnerability could have allowed Virtu’s proprietary traders to take advantage of customer data, engaging in profitable trades ahead of customers’ future orders.

Virtu emphasized that it had informed the SEC about this hypothetical vulnerability during a regulatory examination in 2019. The company expressed disappointment with the SEC’s decision to pursue legal action. CEO Douglas A. Cifu stated that Virtu had made efforts to settle the SEC’s investigation instead of resorting to litigation.

In response to the regulatory turmoil, Virtu’s stock price plummeted by 9% to $16.89 on September 13. However, on the same day, both CEO Cifu and Co-President/Co-Chief Operating Officer Joe Molluso seized the opportunity and acquired shares of Virtu Financial.

Cifu invested a total of $853,150 to purchase 50,000 Virtu shares, at an average price of $17.06 per share. According to documents filed with the SEC, Cifu acquired these shares through a trust, which currently holds a total of 442,755 shares. In addition, he owns another 452,907 shares in a personal account.

Despite the regulatory lawsuit and the subsequent drop in stock price, these bold purchases by Virtu’s leadership team demonstrate their confidence in the company’s long-term prospects.

Insider Stock Transactions

Molluso’s Recent Purchase

Molluso recently acquired 15,000 shares of Virtu for a total of $257,500. This amounts to an average purchase price of $17.17 per share. With this transaction, Molluso’s ownership of Virtu has increased to 358,160 shares.

Virtu’s Response

Although Virtu did not make its executives available for comment, the company expressed strong disagreement with the Securities and Exchange Commission’s (SEC) position. In an email statement, Virtu emphasized its intention to vigorously defend itself and directed readers to a detailed statement addressing the matter.

Cifu’s Previous Purchase

Cifu, another executive at Virtu, made his most recent stock acquisition of the company in May. He paid $842,425 for 50,000 shares, resulting in an average purchase price of $16.85 per share.

Molluso’s Market Debut

This open market purchase marks Molluso’s first venture into acquiring Virtu stock. Previously, the majority of his Virtu shares were obtained through deferred and restricted stock units received as part of his compensation package.

Virtu’s Stock Performance

Virtu’s stock is currently trading at $18, reflecting a 6.5% increase during Thursday’s trading session. However, the shares have experienced a year-to-date loss of approximately 12%.

Inside Scoop: Disclosing Transactions

“Inside Scoop” is a regular feature that covers stock transactions initiated by corporate executives, board members, large shareholders, politicians, and other notable figures. Due to their insider status, these investors are obligated to report their stock trades to the Securities and Exchange Commission (SEC) or other regulatory groups.