Investors and brokers cut ties with the stock-trading venue run by British Barclays BARC.LN 0.00% PLC, disconnecting from one of Wall Street’s biggest so-called dark pools as the firm battles allegations of fraud and misleading its customers.
By: Bradley Hope and Scott Patterson, Wall Street Journal
Broker-dealers, including Credit Suisse Group AG CS +0.88% , Deutsche Bank AG DBK.XE 0.00% , Royal Bank of Canada, RY.T +0.92% Sanford C. Bernstein & Co. and Investment Technology Group Inc., ITG +1.78% removed connections to the dark pool, called Barclays LX, from their routing systems on Thursday, according to people familiar with the decisions.
Those moves followed a civil lawsuit filed Wednesday afternoon by New York Attorney General Eric Schneiderman that accused Barclays of allegedly telling customers it would protect them from high-frequency traders while actually catering to such firms. The allegations, including emails among Barclays executives that appeared to describe decisions to mislead clients, reverberated across Wall Street and among institutional investors across the country.
A Barclays spokesman declined to comment on its relationships with broker-dealers.
Barclays LX is the second-largest dark pool in the U.S., behind one run by Credit Suisse. The Barclays venue handles hundreds of millions of shares a week on behalf of big investment firms. The U.K. bank’s executives referred to it internally as the Franchise, the lawsuit says.
The lawsuit hit Barclays’s share price Thursday, as it fell 6.5% to £2.15.