Class action suit against Barclays alleges forex rigging losses

By Suzanne Barlyn

Nov 27 (Reuters) - A New York-based investment adviser fileda class action lawsuit against Barclays Plc on Friday allegingthat rigged foreign exchange trading practices at the bankcaused "significant damages" to its trading partners.

The suit by Axiom Investment Advisors LLC, filed in aManhattan federal court, follows a pact on Nov 18 in whichBarclays agreed to pay New York State's financial regulator anadditional $150 million to settle allegations stemming fromallegations about the bank's forex practices.

A Barclays spokesman declined to comment.

Barclays, in some instances, used a feature called "LastLook" on its forex trading platform to automatically rejectclient orders that would be unprofitable for Barclays because ofprice swings in milliseconds-long hold periods the bank imposedafter trades were placed, the New York Department of FinancialServices (NYDFS) has said.

The lawsuit could unleash another round of legal headachesfor Barclay's involving its forex practices. Barclay'ssettlement with NYDFS last week followed another penalty by theregulator in May, bringing total penalties by NYDFS against thebank for forex-related conduct to $635 million.

Axiom and other firms, who are counterparties in Barclays'foreign exchange trading, were "unfairly deceived" because ofBarclays' "Last Look" feature, while Barclays was "unjustlyenriched" at Axiom's expense, Axiom said in its suit.

When Axiom placed orders to trade a certain volume ofcurrency, it ultimately did not receive the contract price thatBarclays had agreed on, but often a worse price that was morefavorable to Barclays, Axiom said.

Some of Axiom's allegations mirror those in the recent NYDFSsettlement. For example, some senior Barclays employees toldtraders and technology staff not to let the sales team knowabout the "Last Look" feature.

"If you get inquiries just obfuscate and stonewall," aBarclays head of automated forex trading wrote in 2011,according to the settlement document, a remark that alsoappeared in Axiom's complaint.

Barclays revised its "Last Look" feature last year, afterNYDFS started the forex investigation, to reject trades thatwere unprofitable to both the bank and customers, the NYDFS hassaid. (Reporting by Suzanne Barlyn; Additional reporting by JonathanStempel; Editing by Andrew Hay)