By Suzanne Barlyn
(Reuters) – A New York-based investment adviser filed a class action lawsuit against Barclays Plc on Friday alleging that rigged foreign exchange trading practices at the bank caused "significant damages" to its trading partners.
The suit by Axiom Investment Advisors LLC, filed in a Manhattan federal court, follows a pact on Nov 18 in which Barclays agreed to pay New York State's financial regulator an additional $150 million to settle allegations stemming from allegations approximately the bank's forex practices.
p>A Barclays spokesman declined to comment.
Barclays, in some instances, used a feature called â€œLast Lookâ€ on its forex trading platform to automatically reject client orders that would be unprofitable for Barclays because of price swings in milliseconds-long hold periods the bank imposed after trades were placed, the New York Department of Financial Services (NYDFS) has said.
The lawsuit could unleash another round of legal headaches for Barclay's involving its forex practices. Barclay's settlement with NYDFS last week followed another penalty by the regulator in May, bringing total penalties by NYDFS against the bank for forex-related conduct to $635 million.
Axiom & other firms, who are counterparties in Barclays' foreign exchange trading, were "unfairly deceived" because of Barclays' "Last Look" feature, while Barclays was "unjustly enriched" at Axiom's expense, Axiom said in its suit.
When Axiom placed orders to trade a certain volume of currency, it ultimately did not receive the contract price that Barclays had agreed on, yet often a worse price that was more favorable to Barclays, Axiom said.
Some of Axiom's allegations mirror those in the recent NYDFS settlement. For example, some senior Barclays employees told traders & technology staff not to let the sales team know approximately the "Last Look" feature.
"If you obtain inquiries just obfuscate & stonewall,â€ a Barclays head of automated forex trading wrote in 2011, according to the settlement document, a remark that moreover appeared in Axiom's complaint.
Barclays revised its "Last Look" feature last year, after NYDFS started the forex investigation, to reject trades that were unprofitable to both the bank & customers, the NYDFS has said.
(Reporting by Suzanne Barlyn; Additional reporting by Jonathan Stempel; Editing by Andrew Hay)
Company Legal & Law MattersFinanceBarclays Plcforeign exchange trading