The nation's fifth largest on-line brokerage firm has agreed to pay a $6.3 million fine to the Securities and Exchange Commission (SEC) to settle accusations that it was involved in securities fraud throughout the 1990s. The SEC accused Datek Online Holdings' former day trading unit, Datek Securities, of fraud and illegal bookkeeping practices.

SEC investigators said the firm used an advanced computerized trading system to take advantage of the Nasdaq stock market's small-order execution system. Because the small-order system was intended for smaller investors, brokerage firms such as Datek were not permitted to use it for trading. Datek ignored the prohibition and traded on the system. Consequently, Datek had no competition and the firm made millions off its investors. According to the SEC, the company's owners, Sheldon Maschler and Jeffrey Citron, hid these profits in corporations they controlled. Datek then filed fraudulent profit reports with the SEC. The SEC has yet to file personal charges against the owners, but the agency acknowledges that the investigation is ongoing.