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NY AG Sues Barclays For HFT Fraud - Live Feed

Tyler Durden's picture




 

In what appears to be the first real action post-Flash Boys, NY AG Eric Schneiderman will announce at 4pm ET that Barclays will be sued over fraud allegations related to its Dark Pool's preferential treatment of high-frequency traders. As Bloomberg notes, Barclays runs one of the market's largest dark pools. This comes 2 months after the NY AG sent requests for information to various major HFT shops. It seems, just as we noted here, that a potential scapegoat is being primed 'just in case' this 'market' can't withstand the Fed's pullback.

Live Feed:

 

As Bloomberg reports,

Barclays Plc is being sued by New York’s attorney general over allegations that the bank’s dark pool gave high-frequency traders advantages over other customers, despite saying otherwise, a person familiar with the matter said.

Barclays falsified marketing materials to hide how much high-frequency traders were buying and selling, according to the person familiar with the matter, who asked to not be identified because the information hasn’t been made public.

Barclays runs one of Wall Street’s largest dark pools, a private trading venue where investors can trade stocks mostly anonymously. Mark Lane, a spokesman for London-based Barclays, declined to comment.

...

The Securities and Exchange Commission yesterday said it would test a program, called a trade-at rule, that would limit the amount of trading that takes place off public exchanges such as the New York Stock Exchange and Nasdaq Stock Market. Trading on dark pools and other off-exchange venues makes up roughly 40 percent of U.S. equity volume.

As we concluded previously,

when reality reasserts itself - a reality which Rick accurately points out has been suspended due to 5 years and counting of Fed central-planning - HFT will be "addressed." How? As the scapegoat of course. Because since virtually nobody really understands what HFT does, it can just as easily be flipped from innocent market bystander which "provides liquidity" to the root of all evil.

In other words: the high freaks are about to become the most convenient, and "misunderstood" scapegoat, for when the market finally does crash. Which means that those HFT-associated terms which very few recognize now, especially those on either side of the pro/anti-HFT debate who have very strong opinions but zero factual grasp of the matter, such as the following...

  • Frontrunning: needs no explanation
  • Subpennying: providing a "better" bid or offer in a fraction of penny to force the underlying order to move up or down.
  • Quote Stuffing: the HFT trader sends huge numbers of orders and cancels
  • Layering: multiple, large orders are placed passively with the goal of “pushing” the book away
  • Order Book Fade: lightning-fast reactions to news and order book pressure lead to disappearing liquidity
  • Momentum ignition: an HFT trader detects a large order targeting a percentage of volume, and front-runs it.

... will become part of the daily jargon as the anti-HFT wave sweeps through the land.

Why? Well to redirect anger from the real culprit for the manipulated market of course: the Federal Reserve. Because while what HFT does is or should be illegal, in performing its daily duties, it actively facilitates and assists the Fed's underlying purpose: to boost asset prices to ever greater record highs in hopes that some of this paper wealth will eventually trickle down, contrary to five years of evidence that the wealth is merely being concentrated making the wealthiest even richer.

Amusingly some get it, such as the former chairman of Morgan Stanley Asia, Stephen Roach, who in the clip below laid it out perfectly in an interview with Bloomberg TV earlier today (he begins 1:30 into the linked clip), and explains precisely why HFT will be the next big Lehman-type fall guy, just after the next market crash happens. To wit: "flash traders are bit players compared to the biggest rigger of all which is the Fed." Because after the next crash, which is only a matter of time, everything will be done to deflect attention from the "biggest rigger of all."

So, dear HFT firms, enjoy your one trading day loss in 1238. Those days are about to come to a very abrupt, and unhappy, end.

 

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Wed, 06/25/2014 - 14:59 | 4894601 Four chan
Four chan's picture

right on time, 8 years late.

Wed, 06/25/2014 - 15:02 | 4894610 Say What Again
Say What Again's picture

I wonder if Barklays planted the camera in my office that saw all my orders?

http://www.zerohedge.com/news/2014-06-25/spot-odd-market-out#comment-489...

Wed, 06/25/2014 - 17:10 | 4895230 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

I don't get mad, i get stabby!!!

Wed, 06/25/2014 - 18:51 | 4895604 max2205
max2205's picture

Barkleys will pay 10 mill and keep doing the same thing in a slightly different way

 

 

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............./´¯/'...'/´¯¯`·¸ 

........../'/.../..../......./¨¯\ 

........('(...´...´.... ¯~/'...') 

.........\.................'...../ 

..........''...\.......... _.·´ 

............\..............( 

..............\.............\...

 

 

Wed, 06/25/2014 - 19:51 | 4895808 philipat
philipat's picture

It's strange that the US "Regulators" always seem to find that only non-US Banks are the bad boys. The US Banks are all just doing God's work...........

Wed, 06/25/2014 - 15:05 | 4894631 alien-IQ
alien-IQ's picture

they had to wait for the statute of limitations to kick in just to make sure nobody goes to jail but the illusion of an attempt at justice gets lots of traction in the press. Remember, there are elections to be planned.

Wed, 06/25/2014 - 15:24 | 4894696 nuclearsquid
nuclearsquid's picture

Whats the over/under on the final fine amount?

4$?

 

Oh wait, i forgot, Barclays is European.  $10 Bn?

Wed, 06/25/2014 - 15:39 | 4894779 alien-IQ
alien-IQ's picture

whatever the record is + 1 billion.

just to keep in step with the always record breaking stock market.

Thu, 06/26/2014 - 04:22 | 4896928 monkeyshine
monkeyshine's picture

Nah, it is just a state ag. Not the Feds. Not the SEC. If the ag gets any real dirt the Feds will tske up the case and lose all the evidence in a hard drive crash.

Wed, 06/25/2014 - 17:26 | 4895298 ebworthen
ebworthen's picture

8 years late and not a soul will see jail time; just a kickback to .gov in a "fine".

Wed, 06/25/2014 - 15:22 | 4894609 Dr. Engali
Dr. Engali's picture

Meh. A couple hookers, some blow and a campaign donation....er I mean settlement... should make this go away. Move along.... move along.

 

Edit: Now if the A.G gets caught with his pants down and his socks on.... then we have a story.

Wed, 06/25/2014 - 15:02 | 4894615 alien-IQ
alien-IQ's picture

So I'm gonna go out on a limb here and guess this is...Bullish?

Wed, 06/25/2014 - 15:33 | 4894761 Say What Again
Say What Again's picture

If its news, then its bullish.

See how easy this is!

Wed, 06/25/2014 - 15:03 | 4894620 NEOSERF
NEOSERF's picture

Queue liquidity collapse...

Wed, 06/25/2014 - 15:11 | 4894656 Dr. Engali
Dr. Engali's picture

Is it bad that I read that with a Chinese accent in my head?

 

Riquidity corrapse.

Wed, 06/25/2014 - 15:12 | 4894665 PartysOver
PartysOver's picture

Now that is funny.  Don't care who you are.

Wed, 06/25/2014 - 15:06 | 4894629 NEOSERF
NEOSERF's picture

Yeah,  and Barclays who can't get out of their own way are probably the most egregious player in this space (abeit perhaps the easiest to go after)...would guess a whole host of company shutdowns and layoffs are coming.

Wed, 06/25/2014 - 15:05 | 4894633 NOTaREALmerican
NOTaREALmerican's picture

It's those goddamn British who caused all this.   I knew it!

Wed, 06/25/2014 - 15:08 | 4894643 Son of Loki
Son of Loki's picture

Yeah, right. So the shareholders Bend Over and take it like a pro and pay for the embezzlements and fraud...while zero get indicted for the criminal activity. The Merikan justice system for white collar crime is a farce.

Wed, 06/25/2014 - 15:10 | 4894649 koaj
koaj's picture

billions in profit, a few million in a fine. sounds like normal business to me

Wed, 06/25/2014 - 15:10 | 4894650 buzzsaw99
buzzsaw99's picture

they are doing this because the squid went to 100% dark pools and so round up the usual (non-goldman) suspects boyz.

Wed, 06/25/2014 - 16:11 | 4894984 you enjoy myself
you enjoy myself's picture

i can't for the life of me understand why dark pools for publicly traded stocks are legal.   that said, the best way to put an end to HFT abuses is the get rid of dark pools and let the big boys again be subject to the skimming and quote stuffing that the rest of us have to deal with. 

Wed, 06/25/2014 - 15:10 | 4894651 i_call_you_my_base
i_call_you_my_base's picture

This could have major consequences, which is why nothing will happen.

Wed, 06/25/2014 - 15:10 | 4894655 pods
pods's picture

Just a shake down, nothing more.

pods

Wed, 06/25/2014 - 15:11 | 4894657 orangegeek
orangegeek's picture

So Yellen made the call to the AG - beautiful.  Reads like the shit storm is getting closer.

Wed, 06/25/2014 - 15:14 | 4894668 buzzsaw99
buzzsaw99's picture

i don't understand why the squid hasn't brought out their heavy tanks, the doj and sec, against their competitors yet. free sergey.

Wed, 06/25/2014 - 15:14 | 4894670 Kaiser Sousa
Kaiser Sousa's picture

Physical Gold and Silver.

the antidotes.

 

Wed, 06/25/2014 - 15:30 | 4894734 aleph0
aleph0's picture

And where were all these AGs when the SHTF in 2008 ?

No US Banksters sued, no US Ratings Agencies sued ... nothing . 

There were far more important grounds back then to wake up and sue.

Wed, 06/25/2014 - 15:34 | 4894762 JRobby
JRobby's picture

Just Barclays. What a joke.

Wed, 06/25/2014 - 15:43 | 4894805 firstdivision
firstdivision's picture

I seem to recall there was an unlit pool called SigmaX that was quite large.  Additionally, there was some code that a Russian had, that the operator of this pool claimed was HFT code that can be used to manipulate the market, which also turned out that the operators paid off various law officials to deprive the Russian with US Citizenship of his rights.  When is this operator getting sued?

Wed, 06/25/2014 - 15:55 | 4894874 Sutton
Sutton's picture

Anyone but Goldman,the biggest ripoff Shysters on the Street. 

Wed, 06/25/2014 - 16:04 | 4894931 Dubaibanker
Dubaibanker's picture

Yes...they are all riggers...and everything is rigged...but isn't that all priced in??

Companies have large cash reserves....hefty stock buy backs...massive job lay offs to lower expenses....no capex spending...major shut downs in banking sector around the world....however, it is a fact that people need banks for whatever...credit cards...mortgages...chequing accounts....investment transactions...lending for businesses....funds transfer for businesses and personal activities.......making bill payments....how will the world look if none of this can be done? Forget Facebook and Twitter....we can live without that but bill payments..job searches....info searching via google or google maps or credit cards etc are necessities today.

There is no way that in this internet age we can live without basic banking activity. I believe that all the bad news is priced in. Clients have gotten used to the fact that all banks and all bankers are crooks. Most bankers in villages around the world and their clients in small towns around the world dont even know nor care that the makrtes are rigged because they dont participate in those markets but use banks for some basic rudimentary purposes like chequing acocunts and cash withdrawals and safe keeping etc. It has been proven by major Govts that they will support the banks 'no matter what'.

Just like we have polarisation in the world between the rich and the poor, similarly we will continue to have polarisation in the banking sector whereby large banks will remain large or become larger and small banks will get acquired or get wiped out. Moreover, banks will all move onshore and will not have much offshore presence except for the Chinese banks who will keep growing globally because they have the cash. 

Stocks and banks wont fall down because the Fed is the ultimate buyer and all the HFT and banks and large corporates and now even retail investors are buying the company stocks because corporates are stronger than the Govts while having all the cash on balance sheets and clients are not using advice from the bankers which is why the bankers are falling apart but not the banks themselves.

Wed, 06/25/2014 - 16:10 | 4894975 konputa
konputa's picture

Hey wasn't Barclays one of the banks that was given capitalization leeway?

Wed, 06/25/2014 - 16:14 | 4895004 hugovanderbubble
hugovanderbubble's picture

God save the Queen and Grosvenor Money

Wed, 06/25/2014 - 16:17 | 4895022 Notsobadwlad
Notsobadwlad's picture

Just eliminating competition for Goldman's dark pools and HFT. Isn't that what they always do? Kick the foreign entity to protect the homemensch.

Wed, 06/25/2014 - 16:22 | 4895040 f16hoser
f16hoser's picture

Sure hope NY AG Eric Schneiderman is Sqeeky-Clean? Tomorrow's headline will read just like Eliot Spitzer's did...

Wed, 06/25/2014 - 16:32 | 4895078 disabledvet
disabledvet's picture

"Just change the name back to Lehman Brothers!"

I mean seriously..."only Barclays"? Bwhahahahaha. They're trying to turn this into the British Petroleum of finance. The difference of course is that Barclays really can wall away.

What's that...1/4 the entire economy of New York City? Maybe if instead of suing they would provide some sunlight here then people would take these things seriously. No one has any doubt as to what is going on anymore.

"There are Darker Pools" too.

Wed, 06/25/2014 - 16:35 | 4895088 Iocosus
Iocosus's picture

What about MF Global and JPM?

Wed, 06/25/2014 - 17:41 | 4895197 NuYawkFrankie
NuYawkFrankie's picture

F'kin Brits - besmirching  the good name of Wall St!  I look forward to Rabbi Schneiderman prosecuting those goyim responsible (for encroaching on OUR business model) to the full extent of the Talmud

- Lloyd 'Doin' God's HFT' Blankfart

Wed, 06/25/2014 - 17:03 | 4895199 Bow Tie
Bow Tie's picture

slap on the wrist fine for a couple of mil

Wed, 06/25/2014 - 18:55 | 4895616 Downtoolong
Downtoolong's picture

dark pools

Seriously, did anyone on Wall Street ever even think about the market perception of this phrase when they came up with it? Talk about typical blind Wall Street arrogance. Talk about negative marketing.

Hi, we’re Wall Street, and our slogan is, “We don’t care, because, we don’t have to.”

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