NY Attorney General files lawsuit over Barclays' 'toxic' dark pool

NY Attorney General files lawsuit over Barclays' 'toxic' dark pool

Barclays Bank has been accused of deceptively luring unwary investors to a private trading venue that was actually being run for the benefit of predatory high-frequency traders.

The allegations have been leveled by crusading New York Attorney General Eric Schneiderman, who says that Barclays dramatically increased the market share of its dark pool by lying to clients about the level of protection they would receive from high-frequency trading firms.

"The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit," says Schneiderman. "Barclays grew its dark pool by telling investors they were diving into safe waters. According to the lawsuit, Barclays' dark pool was full of predators - there at Barclays' invitation."

The complaint alleges that the bank falsified marketing material and client reports to hide the extent and type of high frequency trading in its dark pool.

Using information garnered from high-level whistleblowers, Schneiderman's complaint details a series of deceptive practices and deliberate omissions that helped Barclays elevate its LX venue to the number two spot among US dark pools, behind Credit Suisse's Crossfinder network.

"No regulator - no matter how broad their authority - can succeed on its own," says Schneiderman. "I want to personally thank those that have courageously reported wrongdoing to our office and encourage others to do the same."



The Barclays' probe is the latest in a series of investigations led by Schneiderman into the sometimes murky practices of electronic markets, dubbed Insider Trading 2.0.

Comments: (1)

Neil Crammond
Neil Crammond - DIVENTO FINANCIALS - London 26 June, 2014, 10:59Be the first to give this comment the thumbs up 0 likes

finally our complaints have been answered but the cheetahs have been allowed to pick pocket  while the regulators been either asleep or hood winked by the main players . How guilty are the other "dark pools " .Perhaps like  luis suarez  a very long ban is only remedy ?

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