A landmark securities class action case involving allegations of market manipulation via high frequency trading (HFT) continues at the New York Southern District Court. The latest dispute in this case, which targets major US stock exchanges, concerns trading data. In particular, the plaintiffs in this case – a group of investors, allege that UBS Securities has to provide them with a decent volume of trade data. UBS, which is not a party to the litigation, says it does not have to do that.

On November 25, 2020, UBS Securities filed a Letter with the Court, requesting that the plaintiffs’ motion to compel it to produce a heavy volume of trade data be denied.

Let’s recall that this lawsuit was filed on behalf of investors that traded on a registered public stock exchange or a U.S.-based alternate trading venue, between April 18, 2009 and the present, and asserted claims against: (1) registered public stock exchanges located in the United States; (2) a class of brokerage firms; and (3) a class of HFT firms.

The plaintiffs claim, inter alia, that certain defendants allowed HFT firms to profit at the expense of the class and to manipulate securities markets in violation of federal securities laws.

Earlier in November, the plaintiffs requested a discovery conference regarding what they called “UBS’s failure to produce trading data responsive to Plaintiffs’ subpoena served in November 2019 (the “Subpoena”)”. Specifically, the plaintiffs seek an order from the Court compelling UBS to produce trading data related to Plaintiffs’ orders and executions on the Defendant-Exchanges.

On November 25, 2020, UBS replied, explaining that the plaintiffs are seeking to compel the production of massive amounts of trade data associated with orders sent by the plaintiffs’ third-party investment advisors.

UBS says :

“The trade data requested by Plaintiffs is not easily available as Plaintiffs’ investment advisors, not Plaintiffs themselves, are UBS’s clients and the ones actually routing the orders. Nonetheless, over this past year, UBS spent considerable time working to identify trades potentially responsive to the Subpoena. Through several meet and confers and communications, UBS outlined to Plaintiffs the difficulties and significant burden required to parse its database and produce trade data for even a single trade”.

UBS says it worked diligently the past week to try to find a compromise and avoid forcing the Court to resolve this dispute. Unfortunately, according to UBS, the plaintiffs continue to make “overbroad and unduly burdensome demands”.

UBS requests that the Court deny the plaintiffs’ request for an order compelling the production of trade data because

• the requested trade data is beyond the scope of the Subpoena,
• it would require UBS to produce overbroad trade data associated with other non-parties to this litigation, and
• it would necessitate over 150 hours of work from skilled technicians to produce data for just the 500 trades in Plaintiffs’ latest demand.

UBS estimates that would it take at least 20 to 30 minutes to perform a complex search (using the adviser name, date, stock, and direction (i.e., buy/sell)) for each of the trades identified and then review and export responsive trade data. If UBS were required to conduct this process for every trade in Plaintiffs’ latest demand, it would take several weeks of UBS employee time.

The disruption would be severe because UBS would be required to dedicate a skilled technician to do nothing for UBS for over a month in order to run searches for Plaintiffs. Moreover, the bulk of the searches would need to be run after trading hours to avoid interfering with the operation of the UBS’s order and execution system. As such, UBS expects it would take several months to complete the production.

Hence, UBS asks the Court to deny the plaintiffs’ motion to compel it to produce trading data.