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Barclays charged over 'dark pool' share scheme | Barclays charged over 'dark pool' share scheme |
(about 1 hour later) | |
Civil fraud charges have been filed against banking giant Barclays by the New York attorney general alleging its “dark pool” anonymous trading venue was operated to benefit high frequency traders. | |
It said that a major investigation into the US stock market as a whole had discovered “an alleged pattern of fraud and deceit” and “misrepresentations to investors”. | |
Dark pools are perfectly legal, but Barclays is accused of giving a systematic advantage to high-frequency traders over others in its scheme. | Dark pools are perfectly legal, but Barclays is accused of giving a systematic advantage to high-frequency traders over others in its scheme. |
Eric Schneiderman, the Attorney General, said: “The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit. | Eric Schneiderman, the Attorney General, said: “The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit. |
“Barclays grew its dark pool by telling investors they were diving into safe waters. | “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.” | “According to the lawsuit, Barclays’ dark pool was full of predators – there at Barclays’ invitation.” |
In a statement, his office claimed that Barclays had “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”. | In a statement, his office claimed that Barclays had “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”. |
“Contrary to Barclays’ representations that it has implemented special safeguards to protect clients from ‘aggressive’ or predatory high-frequency traders, Barclays is accused of operating its dark pool to favour high-frequency traders,” it added. | “Contrary to Barclays’ representations that it has implemented special safeguards to protect clients from ‘aggressive’ or predatory high-frequency traders, Barclays is accused of operating its dark pool to favour high-frequency traders,” it added. |
The complaint alleges Barclays “falsified marketing material” about its dark pool. | The complaint alleges Barclays “falsified marketing material” about its dark pool. |
“For example, Barclays removed from a marketing document intended for institutional investors the dark pool’s then-largest participant – a high frequency trading firm Barclays knew engaged in predatory behaviour in the dark pool,” the statement said. | “For example, Barclays removed from a marketing document intended for institutional investors the dark pool’s then-largest participant – a high frequency trading firm Barclays knew engaged in predatory behaviour in the dark pool,” the statement said. |
“In response, one employee stated: ‘I had always liked the idea that we were being transparent, but happy to take liberties if we can all agree.’” | “In response, one employee stated: ‘I had always liked the idea that we were being transparent, but happy to take liberties if we can all agree.’” |
The Attorney General’s office said its investigation was helped “significantly” by a number of former Barclays’ employees. | The Attorney General’s office said its investigation was helped “significantly” by a number of former Barclays’ employees. |
“No regulator – no matter how broad their authority – can succeed on its own,” Mr Schneiderman said. “I want to personally thank those that have courageously reported wrongdoing to our office and encourage others to do the same.” | “No regulator – no matter how broad their authority – can succeed on its own,” Mr Schneiderman said. “I want to personally thank those that have courageously reported wrongdoing to our office and encourage others to do the same.” |
Barclays declined to comment when contacted by The Independent. | Barclays declined to comment when contacted by The Independent. |
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