By Christopher M. Matthews
New York state's top prosecutor upped the pressure on Barclays
PLC Wednesday, alleging the bank hasn't cooperated with an
investigation into the activity of high-speed traders in its dark
pool and naming specific employees who were allegedly involved in
wrongdoing.
New York Attorney General Eric Schneiderman, who sued the
British bank in June, said in an amended civil complaint Tuesday
that Barclays had defied subpoenas seeking the testimony under oath
of the two top executives running the bank's Equities Electronic
Trading Division, which oversees its dark pool.
The complaint alleges the executives--William White, head of
electronic trading, and David Johnsen, head of product
development--were themselves directly involved in, and oversaw,
much of the fraudulent activity in the dark pool, which prosecutors
say benefited high frequency traders to the detriment of the bank's
retail investors. Dark pools are electronic trading venues that
don't post investors' buy and sell orders and only report trades to
the public after they take place.
A Barclays spokesman declined to comment on behalf of the bank
and for Messrs. White and Johnsen, who are both still employed
there.
Mr. Schneiderman's office alleged in June that Barclays
constructed its dark pool to benefit high-frequency traders while
simultaneously lying to its other clients by saying the pool was
designed to protect them from high frequency traders.
In July, Barclays filed a motion with N.Y. State Supreme Court
seeking to dismiss the case. The motion said Mr. Schneiderman used
misleading information and cherry-picked facts to support his
allegation that the bank lied to its clients about the activity of
high-speed traders in its "dark pool" and said the case is "based
on clear and substantial factual errors."
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
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