The suit alleges that Barclays misled investors by promising them safety from "aggressive," "predatory" or "toxic" high frequency traders in their off-exchange venues. Where as the bank was operation these 'dark pools' away from the traditional exchanges, where they encouraged high-frequency trading. These hidden exchanges kept no records of the size and price of trading orders.
"Barclays has actively sought to attract such traders to its dark pool, and it has given them advantages over others trading in the pool," the lawsuit alleged.
The lawsuit claims that these 'dark pools' attracted "predators who were there at Barclays invitation," contrary to assurances made to investors that high-frequency trading firms were not operating in its exchanges.
New York Attorney General Eric Schneiderman has been aggressively pursuing the high-frequency trading, attempting to end the risky practice that gives traders an advantage when its comes to placing orders. High-frequency trading helps traders place orders milliseconds before regular traders, potentially leading to large gains made on stock prices.
"The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit," Attorney General Eric Schneiderman said in a statement.
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