New York’s top cop is naming and shaming Barclays’ top executives over guarding its dark pool secrets.
Attorney General Eric Schneiderman filed an amended complaint against the British bank, claiming that two of its top executives aren’t cooperating with the office’s investigation into one of its “dark pools.” The complaint also names additional instances of when Barclays misrepresented its trading platform to investors.
The new accusations come as the AG’s office has combed through hundreds of thousands of additional documents since making its initial accusations in June, according to an official from the AG’s office who wasn’t authorized to speak about the case.
The complaint points to William White, head of electronic trading, and his second-in-command, David Johnsen, head of product development, as refusing to cooperate with the probe. It’s the first time any names have been singled out in the case.
White and Johnsen were instrumental in directing an outsized number of trades to its own “dark pool” — which is a lightly regulated stock exchange — according to the complaint.
That kind of growth was valued internally at as much as $50 million, according to the complaint.
Johnsen was hired by Barclays in March 2012 after being let go by Goldman Sachs for “concerns related to the performance of his supervisory responsibilities,” according to a Financial Industry Regulatory Authority report.
From 2011 to last year, Barclays marketed its dark pool as a safe place for traders where “predatory” high-frequency traders could be banned for aggressive behavior. In fact, White and Johnsen had boasted of kicking out one HFT firm, according to the complaint.
But that wasn’t true, the AG’s office now claims. That firm, GTS Securities, was asked to reduce the number of aggressive orders it sent to the dark pool in June 2012, but “was never prohibited from trading,” the complaint says.
Barclays has previously tried to get the complaint dismissed.
“The fact that the attorney general is seeking to amend its complaint before the court has ruled on Barclays’ motion confirms that the original complaint was inadequate and never should have been filed,” Mark Lane, a Barclays spokesman, said.
“The amended complaint merely repackages the same flawed arguments that were in the original complaint. While we continue to seek to cooperate with the New York attorney general in this matter, we will continue to defend vigorously against these allegations,” Lane added.
Patrick Romanello, a GTS representative, didn’t immediately return a request for comment. White declined to comment. Johnsen wasn’t immediately available for comment.