The Chicago-based Chicago Stock Exchange is being sued by two people alleging that it failed to comply with the city’s anti-corruption laws.
In a court filing, the plaintiffs allege that the trading company traded with the benefit of a tax break that was granted to Chicago traders.
The lawsuit was filed on Thursday by the Chicago-area attorney general’s office.
It seeks a court order to prevent the Chicago Stock Exchanges from providing an exemption from Illinois’ anti-corrupt practice law that would allow them to engage in overnight trading.
The Illinois Anti-Corrupt Practices Act prohibits trading firms from trading overnight with the sole intent of defrauding investors.
The Chicago-listed trading company trades on behalf of a company called Chicago Stock Company that trades on Chicago’s stock exchange.
The filing says the trading firm did not report the benefit from the tax break to state regulators when it made the trade.
“It’s just not right,” Chicago Stock Co-founder Michael J. Shaver said of the trading companies exemption.
“It’s a little bit unfair to the investors and a little little bit unwise.”
Shaver said he hopes the case can put an end to the Chicago trading industry.
“The only way this industry can survive is to have a little more transparency and a lot less deception,” Shaver added.