Great Pacific Securities seeks review of decision in Barclays’ dark pool case

Maria Nikolova

Barclays’ customer alleges the bank made a series of fraudulent misrepresentations and omissions regarding its Liquidity Cross (LX) dark pool.

Bank account for FX firm

A dark pool case may be revived at the Ninth Circuit U.S. Court of Appeals, as Great Pacific Securities, Barclays’ customer, is seeking a review of a Court ruling from July this year that nixed the case against the bank.

The case at hand is a putative class action filed on behalf of institutional traders and brokers who claim that they fell victim to Barclays’ allegedly fraudulent scheme in operating its dark pool, Liquidity Cross (LX).

According to Great Pacific, Barclays marketed LX and other various trading tools to institutional investors as a means to avoid aggressive high frequency traders (HFTs). Great Pacific alleges that Barclays misrepresented both the number of aggressive HFTs trading in LX and its ability and intent to police LX for aggressive HFT behavior. According to Great Pacific, these misrepresentations caused institutional investors to execute trades in LX and pay higher prices on purchases, receive lower prices on sales, and pay fees to Barclays when they would not have otherwise.

The Third Amended Complaint alleges claims for concealment and violation of the Unfair Competition Law and False Advertising Law. In July, the panel affirmed the district court’s dismissal of the complaint.

On Wednesday, September 12th, the plaintiffs filed a petition for rehearing en banc. They say that panel rehearing or en banc review is necessary for a number of reasons.

Particular stress is put on claims that the third amended complaint adequately pleads that the plaintiff was unaware of Barclays’ wrongful conduct, relied on the marketing materials received from Barclays, and would have behaved differently had the omitted information been disclosed. The plaintiffs argue that, contrary to the panel’s decision, the complaint expressly alleges that the plaintiff was exposed to marketing materials aside from the February 2012 pitchbook.

Great Pacific insists it was entitled to a presumption of reliance due to the materiality of the concealed information. By failing to presume reliance, the panel misapplied governing California law.

Accordingly, en banc review is necessary to secure uniformity of the Court’s decisions, the plaintiffs say.

The case is captioned Great Pacific Securities v. Barclays Capital Inc., et al (0:16-cv-56804).

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