NEW YORK (CBSNewYork/AP) — New York’s attorney general has accused British banking and financial services firm Barclays PLC of misleading large institutional investors and other clients by falsely telling them it was taking measures to protect them from predatory high-frequency traders.
The allegations against Barclays were contained in a securities fraud lawsuit that Attorney General Eric Schneiderman announced at a Manhattan news conference Wednesday.
The complaint, filed in state Supreme Court, portrays “a flagrant pattern of fraud, deception and dishonesty with Barclays clients and the investing public,” the attorney general said.
As 1010 WINS’ Holli Haerr reported, Schneiderman claims Barclays told certain clients the company had a special program to protect them against high-frequency traders, but instead the firm favored those types of investors in a private trading platform called a dark pool.
High-frequency traders use computer programs to buy and sell stocks, sometimes in a second or less, Haerr reported.
New York AG Files Lawsuit Against Barclays PLC Over Alleged Deceit
“As one former Barclays director put it, ‘it’s almost like they are building a car and saying it has an airbag, when it actually has no airbag, or even brakes,'” Schneiderman said.
Dark pool investors and regular clients at Barclays were affected by the claim because the company steered the vast majority of trades, 75 percent, to its dark pool, according to the complaint.
Information from former high-level insiders at Barclays and email evidence show that Barclays was determined to raise profits by making its dark pool, referred to internally as The Franchise, the largest on Wall Street, New York authorities 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 the market is a top priority at Barclays,” Lane said.
The lawsuit asks the court to order Barclays to halt the behavior and pay unspecified damages.
Schneiderman would not comment on exactly how much the lawsuit is seeking, he just called it “a lot,” Haerr reported.
Check Out These Other Stories From CBSNewYork.com:
- Bernie Sanders Supporters Chant ‘Hell No, DNC, We Won’t Vote For Hillary’ In First Major Protests Ahead Of DNC
- Another Summer Scorcher As Tri-State Enters 4th Day Of Heat Wave
- DNC Chair To Step Down After Convention Following Wikileaks Email Controversy
- Mike Piazza Inducted Into Baseball Hall Of Fame
(TM and © Copyright 2014 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2014 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)