BARCLAYS SEEKS N.Y. JUDGE IN DARK POOL TRADING SUITS

Barclays Plc (BARC) asked that a federal judge in New Yorkhandle claims it hid the role of high-frequency traders in its dark pool, saying the evidence in the case is “incredibly complex” and includes millions of trading records.

Barclays, the U.K.’s second-biggest bank by assets, is being sued by institutional investors in at least five federal lawsuits claiming it cheated customers by giving preference to high-frequency traders on its alternative trading venue, Barclays LX. New York Attorney General Eric Schneiderman sued Barclays in state court in June.

Jeffrey T. Scott, a lawyer for the bank, today asked a panel of five judges to assign the federal suits to U.S. District Judge Jesse Furman in Manhattan. The judges, on the U.S. Judicial Panel on Multidistrict Litigation, heard arguments on the request today in Charleston, South Carolina.

If the Barclays request is granted, Furman will supervise pretrial evidence-gathering and requests by Barclays and other defendants to dismiss the case.

In addition to Barclays, investors sued seven public exchanges, including the Chicago Board Options Exchange Inc., Nasdaq OMX BX Inc. and New York Stock Exchange. The investors claim the exchanges fraudulently provided private data feeds and co-location services to high-frequency traders, at the expense of other traders.

Barclays and the other defendants are seeking to have the suits thrown out.

Dark Pools

Dark pools such as Barclays LX are private stock markets usually operated inside large banks. Unlike the public exchanges, supply and demand is kept private until after trades are executed. Investors that use dark pools may be seeking better prices by masking their trading strategies. Some investors claim the system allows the banks to provide secret advantages to favored traders.

Furman is already overseeing four of the cases, which were filed in New York. Barclays argued that the suits all share similar allegations and that Furman is in the best position to oversee them.

Costa Mesa, California-based Great Pacific Securities, which sued Barclays in federal court in Los Angeles, argued against transferring the case to Furman.

“Barclays wants you to take a narrowly tailored action and bundle it with the New York cases, which include a broad range” of claims, Great Pacific’s lawyer Yury A. Kolesnikov told the panel.

Nationwide Class

The investors, which include the city of Providence, Rhode Island, the Plumbers and Pipefitters National Pension Fund and the Employees’ Retirement System of the Government of the Virgin Islands, seek to represent a nationwide class of investors who claim they traded stocks from April 18, 2009, to the present and lost money as a result of the defendants’ alleged misconduct.

When Barclays lawyer Scott started to make his argument from the counsel table, U.S. District Judge Sarah Vance, who led today’s panel, told him to move to a podium in front the five judges.

“If you are going to tell us about dark pools, you have to do it from close range,” the judge said to laughter from spectators.

The case is In Re Barclays Liquidity Cross and High Frequency Trading Litigation, MDL No. 2589, U.S. Judicial Panel on Multidistrict Litigation (Washington). The Schneiderman case is New York v. Barclays Capital Inc., 451391/2014, New York State Supreme Court, New York County (Manhattan).

Bloomberg