New York’s top securities regulator Eric Schneiderman has filed a fraud lawsuit against Barclays for allegedly favouring high-speed traders using its dark pool trading venue.
Dark pools are trading systems set up by banks that operate outside regulated exchanges.
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The complaint alleges Barclays has dramatically increased the market share of its dark pool through a series of false statements to clients and investors about how, and for whose benefit, Barclays operates its dark pool.
"The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit," Attorney General Schneiderman said.
The complaint alleges that Barclays falsified marketing material purporting to show the extent and type of high frequency trading in its dark pool.
It is also alleged that the British banking giant heavily promoted a service called Liquidity Profiling, which the bank claimed was a "surveillance" system that tracked every trade in Barclays’ dark pool in order to identify predatory traders, rate them based on the objective characteristics of their trading behavior, and hold them accountable for engaging in predatory practices.
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By GlobalDataBarclays said it took the allegations seriously and had been co-operating with the attorney general and other regulators.
"The integrity of the markets is a top priority for Barclays," the bank said.
