Barclays share price plunges as bank faces US lawsuit

on Jun 26, 2014
Updated: Apr 9, 2020
Listen, Thursday, June 26: Shares in Barclays (LON:BARC) plunged at the opening bell this morning, after New York’s top securities regulator filed a fraud lawsuit against the British bank.

By 08:27 BST, Barclays’ share price had declined 5.17 percent to 218.10p, making the lender the worst early session performer on Britain’s benchmark FTSE 100 index.
The New York Attorney General, Eric Schneiderman, yesterday filed a securities fraud lawsuit against Barclays, contending that contrary to its own assurances, the bank had operated its private equity trading platform, known as a ‘dark pool’, to favor high-frequency traders – firms that use complex computer systems to buy and sell huge volumes of stocks in milliseconds to take advantage of often tiny movements in share prices.

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The complaint, filed in state Supreme Court, portrays “a flagrant pattern of fraud, deception and dishonesty with Barclays clients and the investing public,” Schneiderman said.
The securities regulator accused Barclays of falsely representing the concentration of high-frequency traders in its private trading platform, Barclays LX. He also claimed the British bank had falsified marketing materials and misrepresented a service that purported to protect investors from predatory trading behavior.

“The lawsuit filed today charges that Barclays grew its dark pool into one of the largest in the United States by telling investors they were diving into safe waters,” Schneiderman said. “In fact, Barclays’ dark pool was full of predators who were there at Barclays’ invitation,” he added.
The attorney general revealed that the lawsuit had been compiled with the help of former senior Barclays traders. The lawsuit, which alleges the bank violated New York’s Martin Act, is seeking an unstated amount of damages and restitution.

Barclays’ dark pool – which allows investors to trade large blocks of shares anonymously, with prices posted publicly only after deals are done — was the second largest alternative trading system in the US for the week of June 2, according to data from the Financial Industry Regulatory Authority, trading more than 282 million shares during the period.

Regulators, including the Securities and Exchange Commission (SEC), are concerned that dark pools have grown too quickly – to about 50 venues – without supervision or transparency and have pledged to increase oversight.
**Barclays takes allegations ‘very seriously’**

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 market is a top priority at Barclays,” he remarked.
“Barclays will update the market, if appropriate, in due course,” the bank said in a statement to the London Stock Exchange this morning.
The lawsuit is the latest legal setback for the UK bank, which was embroiled in the Libor rate-fixing scandal (Gold price rigged by Barclays trader).
**Barclays share price plunges over 5%**
The news of the US lawsuit has triggered a major sell-off in Barclays’ stock. By 08:28 BST, Barclays’ share price had declined 5.22 percent to 218.00p.
Of the 28 analysts projecting 12 month price targets for Barclays for The Financial Times, the median target is 290.50, with a high estimate of 365.00p and a low estimate of 203.22p.
**As of 08:28 BST, buy Barclays shares at 217.30p.**
**As of 08:28 BST, sell Barclays shares at 217.25p.**


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