BOSTON (CBS) – A Boston-based trading system with a sinister name – “Dark Pool” – is paying an $800,000 penalty to the Securities and Exchange Commission for apparently leaving the door open.

The private trading operator, EBX, is charged with failing to protect the confidentiality of its members.

WBZ NewsRadio 1030′s Anthony Silva reports

The SEC’s Associate Director of Enforcement John Duggan says a dark pool is a trading program operated by a broker-dealer, where customers can put in a preferred trade to either buy or sell some particular stock at a particular amount at a particular price. Duggan says generally, the amounts and prices cannot be seen by anyone outside the pool.

Duggan says the term “dark pool” comes from the fact that orders are hidden from the general public. That way, someone who, for example, wants to buy or sell a large block of stock has the benefit of keeping that information from the rest of the world.

Duggan says EBX broke its agreement with investors by allowing trading information to flow to outside vendors.

Duggan says dark pool trading programs are relatively new, and the SEC has been keeping a close eye on them.