New York Attorney General, Eric Schneiderman, claims it gained an unfair edge through high frequency trading
New York Attorney General, Eric Schneiderman, claims Barclays gained an unfair edge through high frequency tradingReuters

Barclays shares fell by nearly 5% in the market open following news the New York Attorney General, Eric Schneiderman, slapped a securities fraud lawsuit on the bank for what he claims are unfair practices associated with its high frequency trading (HFT) techniques.

The Barclays stock price dropped to 220.05p after investors feared the repercussions over Schneiderman's claim that the bank maximised profits by executing a bulk of transactions through HFT and on anonymously traded "dark pools", even though its clients might have got a better deal on regular exchanges.

He also added that Barclays lied to customers through its marketing material.

"The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit," said Schneiderman in a statement when announcing the lawsuit.

"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," he said.

"No regulator – no matter how broad their authority – can succeed on its own. I want to personally thank those that have courageously reported wrongdoing to our office and encourage others to do the same."

Barclays said "we take these allegations very seriously". The bank said it is cooperating with authorities, looking at the matter internally, and that the integrity of markets is a top priority.