State’s suit accuses Barclays of fraud
British banking and financial services firm Barclays misled large institutional investors and other clients by falsely telling them it was taking measures to protect them from predatory high-frequency traders, New York’s attorney general said Wednesday.
The allegations against Barclays were contained in a securities fraud lawsuit that Attorney General Eric Schneiderman announced at a Manhattan news conference.
The complaint, filed in the state Supreme Court, portrays “a flagrant pattern of fraud, deception and dishonesty with Barclays clients and the investing public,” Schneiderman said.
In a statement, Barclays spokesman Mark Lane said the bank was cooperating with the attorney general. “We take these allegations very seriously. . . . The integrity of the market is a top priority at Barclays,” Lane said.
The lawsuit alleges Barclays, which has headquarters in London, deceived investors about its dark pool, an electronic trading operation intended to shield them from the high-frequency traders who use sophisticated computer programs to get early access to pending orders and other market-moving information. The bank promoted a service it claimed was a “surveillance” system that would identify and hold accountable “toxic,” “predatory” and “aggressive” traders, the lawsuit says.
Instead, the service “was essentially a sham,” Schneiderman said. “Barclays has never prohibited any trader from participating in its dark pool, regardless of how predatory or aggressive its behavior was determined to be.”
The lawsuit asks the court to order Barclays to halt the behavior and pay unspecified damages.
— Associated Press