LONDON (Alliance News) - Barclays PLC is undertaking a "full internal investigation" into allegations by the New York Attorney General that the bank grew its dark pool by operating it to the benefit of high-frequency traders despite telling clients and investors that they were diving into safe waters, according to a letter sent to colleagues by Chief Executive Antony Jenkins.
Barclays has been stung by the allegations made earlier this week by Eric Schneiderman, who alleged that the bank showed a "disturbing disregard" for its investors in a systematic pattern of fraud and deceit. The complaint accused Barclays of presenting its dark pool as having special safeguards to protect clients from "aggressive" or predatory high-frequency traders, despite the lawsuit claiming that the dark pool was "full of of predators - there at Barclays' invitation".
The lawsuit also alleges that Barclays falsified marketing material, in one case removing a high-frequency trading firm that was then the dark pool's largest participant from documents intended for institutional investors.
In Jenkins' letter to colleagues, he admitted his "deep disappointment and frustration" that Barclays is back in the news for the wrong reasons, and said that he "will not tolerate any circumstances in which our clients are lied to or misled." The CEO wrote that any such instances will be dealt with "severely."
"To assist us in that we have brought in substantial external resource to ensure that the investigation can proceed at pace and is properly objective," Jenkins wrote, adding that the bank is moving to understand the facts and is co-operating with the New York authorities.
The allegations are the latest blow to Jenkins' efforts to restore the beleaguered bank's reputation in the wake of a number of high-profile cases of bad behaviour in recent years. Last month, Barclays was fined GBP26.0 million by the Financial Conduct Authority over failings in its systems and controls surrounding the London Gold Fixing, with one of its former traders banned for trying to profit at a customer's expenses by influencing the process. The trader's actions came just one day after the bank was fined GBP290.0 million for its role in the Libor rigging scandal.
Barclays shares were Friday quoted up 1.2% at 217.50 pence after finishing Thursday as the FTSE 100's biggest faller. Shares are at their lowest point since November 2012.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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