Class action suit against Barclays alleges forex rigging losses

Barclays sometimes used a feature on its forex trading platform to automatically reject client orders that would be unprofitable for it because of price swings

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 November 18 in which Barclays agreed to pay New York State's financial regulator an additional $150 million (£100 million) to settle allegations stemming from allegations about the bank's forex practices.

A Barclays spokesman declined to comment.

Barclays, in some instances, used a feature called "Last Look" 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 and 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, but often a worse price that was more favourable to Barclays, Axiom said.

Some of Axiom's allegations mirror those in the recent NYDFS settlement. For example, some senior Barclays employees told traders and technology staff not to let the sales team know about the "Last Look" feature.

"If you get inquiries just obfuscate and stonewall," a Barclays head of automated forex trading wrote in 2011, according to the settlement document, a remark that also 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 and customers, the NYDFS has said.