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By Herbert Lash
NEW YORK, Sept 16 (Reuters) - New York's attorney generalsaid on Tuesday that Barclays Plc's motion to dismissthe state's lawsuit alleging the bank lied to customers about"high-frequency" trading on its private trading platform shouldbe denied.
New York Attorney General Eric Schneiderman said in responseto the motion filed in July that Barclays' arguments to dismissthe lawsuit are "misguided" and "disingenuous" by suggesting thecase falls outside of the scope of the state's securities laws.
Schneiderman said New York's powerful securities law, astatue known as the Martin Act, has long co-existed with federalsecurities regulation and enforcement, and he said that thesuggestion federal law should take precedence is misguided.
Schneiderman's complaint, filed in June, alleged thatBarclays promised to ensure the best possible price for tradesbut instead took steps that maximized the bank's profits.
Nearly all orders were executed on its own trading platform,a "dark pool" called LX, when better prices might have beenobtained if Barclays had sent trades to other stock exchanges orvenues, the complaint said.
The lawsuit is the highest profile case yet as U.S.authorities move to make trading more transparent and to ensureinvestors are not being overcharged as more and more trades areexecuted on dark pools and other alternative trading systems.
Schneiderman repeated previous allegations thatrepresentations made by Barclays about its dark pool were false,such as protections it offered against aggressive high-frequencytrading and how it routed client orders.
"Barclays' false assurances are manifested in the theme setforth in its marketing material: 'Protecting clients in thedark,'" the attorney general said.
Barclays has until Oct. 12 to respond, after which the casewill go to trial if a settlement isn't reached.
(Reporting by Herbert Lash; Editing by Chris Reese and SteveOrlofsky)