Barclays to contest fraud lawsuit
Barclays has vowed to fight a fraud lawsuit in which New York’s attorney general alleged the banking giant misled large institutional investors.
The London-based company, which lost £3 billion of its stock market value in one session after the claims were disclosed last month, said it had a duty to its shareholders, clients and staff to defend its position.
The lawsuit alleged Barclays deceived investors about its dark pool, an electronic operation where trades take place out of public view.
New York’s attorney general Eric Schneiderman said the bank was supposed to shield investors from high-frequency traders who use sophisticated systems to get early access to pending orders and other market-moving information.
He said the bank promoted a service it claimed was a ”surveillance” system that would identify and hold accountable ”toxic”, ”predatory” and ”aggressive” traders but instead the service ”was essentially a sham“.
In its response to the allegations today, Barclays said the complaint failed to identify any fraud, material misstatements or victims and overlooks the fact that its clients are sophisticated traders who invest billions of dollars of assets.
It said the case relied on “snippets of marketing brochures and brief quotes in news articles” and pointed out that the regulation of dark pools was primarily the responsibility of the Securities and Exchange Commission.
The company said: “Barclays works closely with its regulators in all jurisdictions and will continue to cooperate with the New York attorney general.
“However, we do not believe that this suit is justified, and we have a duty to our shareholders, clients and staff to defend our position.”
The lawsuit asks the court to order Barclays to pay unspecified damages.
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 last month.
