Shares in Barclays have fallen 6.52% after the New York attorney general filed a fraud lawsuit against the bank.
The lawsuit alleges the bank falsified documents and misrepresented benefits it was offering to big institutional clients, including pension funds.
It relates to the bank's "dark pool" trading operations, which allow clients to trade large blocks of shares while keeping prices private.
Barclays said it was taking the allegations "very seriously". Shares in the bank opened down about 4% in London and at one point in mid-afternoon trading were almost 9% lower, before closing down 6.52%.
Other European banks lost ground on fears they could also be targeted.
Prosecutors said Barclays misrepresented the kinds of investors that were using the dark pool. They said the bank claimed the pool was closed to aggressive traders, but in reality it was not.
They also said the bank had misled ordinary investors by claiming it would use a stock exchange or dark pool that "would best execute their trades" at any given time, but in fact the trades were "nearly always" routed to Barclays' own dark pool so the bank could make more money.
The world's major stock markets, such as the London and New York Stock Exchanges, are known as light markets, as they are highly transparent and regulated. Dark pools are private markets set up by banks that are less transparent and so are not open to the same levels of scrutiny.
'Full of predators'
New York attorney general Eric Schneiderman 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. According to the lawsuit, Barclays' dark pool was full of predators - there at Barclays' invitation," he said. The complaint details "a flagrant pattern of fraud, deception and dishonesty with Barclays clients and the investing public," he added.
Mr Schneiderman said presentations made by Barclays were "demonstrably false". He read out some of the emails cited in the complaint.
One, from a vice-president of sales, said: "I always like the idea we are being transparent, but happy to take liberties if we can all agree".
bbc.com
The lawsuit alleges the bank falsified documents and misrepresented benefits it was offering to big institutional clients, including pension funds.
It relates to the bank's "dark pool" trading operations, which allow clients to trade large blocks of shares while keeping prices private.
Barclays said it was taking the allegations "very seriously". Shares in the bank opened down about 4% in London and at one point in mid-afternoon trading were almost 9% lower, before closing down 6.52%.
Other European banks lost ground on fears they could also be targeted.
Prosecutors said Barclays misrepresented the kinds of investors that were using the dark pool. They said the bank claimed the pool was closed to aggressive traders, but in reality it was not.
They also said the bank had misled ordinary investors by claiming it would use a stock exchange or dark pool that "would best execute their trades" at any given time, but in fact the trades were "nearly always" routed to Barclays' own dark pool so the bank could make more money.
The world's major stock markets, such as the London and New York Stock Exchanges, are known as light markets, as they are highly transparent and regulated. Dark pools are private markets set up by banks that are less transparent and so are not open to the same levels of scrutiny.
'Full of predators'
New York attorney general Eric Schneiderman 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. According to the lawsuit, Barclays' dark pool was full of predators - there at Barclays' invitation," he said. The complaint details "a flagrant pattern of fraud, deception and dishonesty with Barclays clients and the investing public," he added.
Mr Schneiderman said presentations made by Barclays were "demonstrably false". He read out some of the emails cited in the complaint.
One, from a vice-president of sales, said: "I always like the idea we are being transparent, but happy to take liberties if we can all agree".
bbc.com
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