Weekend Economists' Demeter Film Award Reveal January 23-25, 2015

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29. High-Frequency Probe’s First Target Is Barclays

http://www.bloomberg.com/news/2015-01-23/high-frequency-probe-s-first-target-is-barclays.html

New York Attorney General Eric Schneiderman’s 10-month investigation into high-speed trading has so far led to one big target: Barclays Plc. (BARC)

Almost a year after New York’s top cop made a splash with subpoenas of six high-frequency trading operations, the names of some of these firms cropped up in documents filed this week in the state court in Manhattan. The firms aren’t defendants, though. They are listed as part of Schneiderman’s proposed updated complaint against Barclays, which ran the private trading venue, or dark pool, where these firms traded.

Schneiderman’s suit doesn’t allege any wrongdoing by the high-frequency trading firms. Its focus, instead, is whether Barclays lied to its customers about what HFT firms were doing inside Barclays’s dark pool, one of Wall Street’s largest in-house trading platforms.

“High-frequency trading and dark pools are legal businesses and can be beneficial to the market,” said Deborah Meshulam, a partner at DLA Piper who specializes in securities enforcement. “Unless there are changes in the regulations, then it is hard to say just how many high-frequency-trading related cases will come to light.”