Member Article

Barclays faces US legal action over fraud

Charges have been brought against Barclays by New York state prosecutors over fraud allegations in the US.

The US authorities have accused Barclays private trading system as being a “dark pool” and alleges that the bank misled investors about “predatory” practices in the system.

Dark pools are off-exchange systems that allow investors to trade blocks of shares anonymously, with the size and price of the orders hidden from other participants.

According to Sky News, New York Attorney General Eric Schneiderman alleged that the London-based bank’s dark pool gave advantages to high-frequency traders.

“The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit,” Mr Schneiderman said.

“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.”

A Barclays spokesman, said: “We take these allegations very seriously.

“Barclays has been co-operating with the New York Attorney General and the SEC and has been examining this matter internally. The integrity of the markets is a top priority of Barclays.”

In a note on the stock exchange, Barclays said: “Barclays notes the Complaint filed by the New York State Attorney General this afternoon in the New York State Courts.

“The Complaint relates to the Attorney General’s investigation of LX Liquidity Cross, which is Barclays’ SEC-registered Alternative Trading System and which provides alternative liquidity to market participants.

“The Complaint makes a number of allegations, including fraud and deceptive practices. Amongst other relief, the Complaint seeks unspecified monetary damages and injunctive relief.

“Barclays will update the market, if appropriate, in due course.”

This was posted in Bdaily's Members' News section by Clare Burnett .