Prosecutors in New York have sued British bank, Barclays for "dark pool" fraud. The financial services firm has been accused of running a securities trading operation to the benefit of "predatory" traders.
New York state Attorney General Eric Schneiderman announced the fraud lawsuit on Wednesday, accusing Barclays of making false statements about its private stock trading platform known as a "dark pool."
The lawsuit alleges that Barclays told investors it had set up safeguards to protect them from "predatory" high-frequency traders, but actually took steps that benefited these 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," said 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."
Schneiderman also said Barclays has not prohibited any traders from participating in its dark pool, where there is little pre-trade pricing transparency, regardless of how predatory they were.
Barclays spokesman, Mark Lane, said in a statement that the bank was cooperating with prosecutors.
"We take these allegations very seriously…The integrity of the market is a top priority at Barclays," he said.
hc/lw (AFP, AP)