Parties in “dark pool” case against Barclays propose $27m settlement

Maria Nikolova

Barclays Plc and Barclays Capital Inc are entering into the agreement with the plaintiffs solely to eliminate the burden and expense of further litigation.

The “dark pool” case against Barclays PLC (LON:BARC), its United States subsidiary Barclays Capital Inc. and William White, former Head of Equities Electronic Trading at Barclays Capital, appears to be close to an end, as the parties in the lawsuit have filed a stipulation of Settlement Agreement with the New York Southern District Court.

The agreement has been reached by Class Representatives Joseph Waggoner and Mohit Sahni on behalf of themselves and each of the Class Members, and defendants Barclays PLC and Barclays Capital Inc. and William White. The Stipulation is intended to fully, finally, and forever resolve, discharge, and settle the released Claims, subject to the approval of the Court.

Let’s recall that, an initial complaint was filed by Barbara Strougo on July 28, 2014. This complaint has been subsequently amended. Thus, Second Amended Complaint alleges that during the Class Period, Barclays issued misstatements concerning the operation of its dark pool, known as Barclays’ Liquidity Cross or LX. More particularly, the Complaint alleges that Barclays continuously misled investors by touting LX as a safe trading venue “built on transparency,” with “built in safeguards to manage toxicity of aggressive traders” who could victimize other dark pool investors by trading ahead of anticipated purchase and sell orders, thereby rapidly capitalizing on proprietary information regarding trading patterns.

The Complaint also says that Barclays touted its Liquidity Profiling tool, which Mr White (who managed the business unit that operated LX) described, as “a sophisticated surveillance framework that protects clients from predatory trading activity in LX.”

The Complaint further alleges that Barclays failed to disclose that it did not in fact effectively protect LX clients from predatory trading with Liquidity Profiling partly because Barclays applied manual overrides to move “aggressive” clients to more “passive” categories, failed to police LX to prevent/punish toxic trading, intentionally altered marketing materials to omit reference to the largest predatory high frequency trader in LX, preferentially routed dark orders to LX where those orders rested for two seconds seeking a “fill” vulnerable to toxic traders, and did not include the NYSE and EDGX direct feeds to construct the national best bid and best offer (“NBBO”) used to update the prices of orders resting in LX.

According to the Complaint, investors learned the truth on June 25, 2014, when the New York State Office of the Attorney General commenced a lawsuit against Barclays over misrepresentations regarding the operation of LX. The Complaint alleges that after the announcement of the NYAG’s action, Barclays’ ADS fell 7.38% on June 26, 2014.

In October, November, and December 2018, the parties resumed settlement discussions and conferred periodically in an effort to resolve the litigation. After extended negotiations, the parties executed a Memorandum of Understanding setting forth their agreement in principle to settle the Litigation. Subsequently, the Settling Parties continued negotiations resulting in the terms and conditions set forth in the stipulation filed with the Court on Monday, January 28, 2019.

Under the terms of the proposed settlement, Barclays shall pay the Settlement Amount of $27 million on behalf of all Defendants and Dismissed Defendants. Such amount is paid as consideration for full and complete settlement of all Released Claims.

Neither the Settlement nor any of the terms of this Stipulation shall constitute an admission or finding of any fault, liability, wrongdoing, or damage whatsoever, or any infirmity in the defenses that Defendants have, or could have, asserted in the Litigation. Defendants are entering into this Stipulation solely to eliminate the burden and expense of further litigation.

Read this next

Retail FX

Banxso announces 8.7% interest rate on deposits in South Africa

“With Banxso, they can enjoy the benefits of both worlds – earning competitive interest and having the freedom to trade, all within the same platform.”

Industry News

FINRA to publish transaction details in U.S. Treasury securities

“Consistent with our longstanding practice, FINRA is introducing greater transparency in a calibrated and careful manner, benefiting liquidity and resilience in this critical market while also mitigating potential information leakage concerns.”

Institutional FX

OpenYield launches “cheap and easy” fixed income trading for brokers

“We’re on a mission to make bonds cheap and easy to trade, and are excited about the opportunity to build generational capital markets infrastructure.”

Digital Assets

Sumsub and Mercuryo publish a guide for VASPs: “Mastering Travel Rule Compliance”

“At Sumsub, we’ve concentrated our efforts on filling the gap in understanding the complexity of Travel Rule regulation and helping organizations find the best solution to stay safe and compliant while minimizing costs and avoiding potential risks of non-compliance. This guide we created with Mercuryo, our trusted partner, is the ultimate navigation tool all VASPs can consult.”

Digital Assets

Bitget Wallet Leads with Record Swap Volume & New Crypto Innovations

This week, Bitget Wallet achieved a milestone by surpassing Metamask with a record 388,757 Swap order transactions, securing the global lead. The significant 7-day trading volume, almost 68,000 more than its rival, underscores its liquidity and user trust. This robust activity signals Bitget Wallet’s prominent role and reliability in the dynamic crypto market.

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

<