An earth shattering 5% has been wiped off the Barclays share price after the New York attorney general accuses the bank of a systematic pattern of fraud and deceit.
The allegations about the way Barclays treated customers in its ‘dark pool’ trading operation.
The sharp fall in the Barclays share price happen on Thursday, the new chief executive Antony Jenkins is obviously trying to recover the banks reputation after the libor scandal back in 2012. An amazing “£2 billion” was wiped off the banks share price today.
A lawsuit was filed overnight in the USA, this action has triggered a knock on effect for the banks share price. New York attorney general Eric Schneiderman has accused Barclays of fraud and deceit by way of it’s use of its “Dark Pool” trading system.
A banking analyst at Cenkos, Sandy Cenkos, thinks that Us authorities may consider injunctions against barclays and may even review Barclays’ bank licence in New York State.
So, What is a Dark Pool Trading System?
The dark pool allows traders to remain anonymous and favour high frequency traders. These traders are professionals who often use very integrate computer systems to buy and sell huge volumes of stocks in milliseconds to profit from the small movements in the share price.
Barclays share price suffered when the bank ran in with regulators in June 2012 over the libor-rigging scandal. Barclays was fined £290million and the US promised to it would face prosecution if it broke more rules in the next two years. This two year period ends this month, so it seems this could not have came a worse time for the bank. The Barclays share price is a true reflection on how serious these allegation are! The banking behemoth is not the only Europeon bank facing action in the US, most notably BNP Paribas are also facing action.
Attorney general Schneiderman said:
“The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit. Barclays grew its dark pool by telling investors they were diving into safe waters. According to the lawsuit, Barclays’ dark pool was full of predators – there at Barclays’ invitation.”