Barclays is being sued by the New York attorney general’s office over claims that it falsified marketing materials to mislead clients into investing in its dark pool operation. The allegations come in the wake of the bank's role - among those of other banks - in rigging interbank interest rates such as LIBOR.

Barclays is being sued by the New York attorney general’s office over claims that it falsified marketing materials to mislead clients into investing in its dark pool operation. The allegations come in the wake of the bank's role - among those of other banks - in rigging interbank interest rates such as LIBOR.

Dark pool trading operations allow clients to trade shares while keeping prices private until the deal is completed. They have been criticized for their lack of transparency and hurting the ability of the market to accurately price securities.

New York attorney general Eric Schneiderman said in a statement that despite claims from Barclays that safeguards were in place to protect clients, the bank had operated its dark pool to favor high-frequency traders.

“The facts alleged in our complaint show that Barclays demonstrated a disturbing disregard for its investors in a systematic pattern of fraud and deceit,” said Schneiderman.

“Barclays grew its dark pool by telling investors they were diving into safe waters. According to the lawsuit, Barclays’ dark pool was full of predators – there at Barclays’ invitation,” he added.

Schneiderman alleges that Barclays falsified marketing material purporting to show the extent and type of high frequency trading in its dark pool. In one example, he said Barclays removed from a marketing document the dark pool’s then-largest participant – a high frequency trading firm Barclays knew engaged in "predatory" behavior in the dark pool. He said that in response, one employee allegedly stated:  “I had always liked the idea that we were being transparent, but happy to take liberties if we can all agree.”

According to Schneiderman, Barclays heavily promoted a service called Liquidity Profiling, which the bank claimed was a “surveillance” system that tracked every trade in its dark pool in order to identify predatory traders and hold them accountable.

Despite these promises, the attorney general alleges that Barclays has never prohibited any trader from participating in its dark pool, regardless of how predatory its activity was determined to be, and assigned safe ratings to traders that were otherwise determined to be toxic.

The complaint further alleges that Barclays operates its dark pool to favor high-frequency traders and has actively sought to attract them by giving them systematic advantages over others trading in the pool.

The statement said that the investigation was aided “significantly” by a number of former Barclays’ employees.

A spokesperson for Barclays said the bank was taking the allegations “very seriously”.

“Barclays has been cooperating with the New York Attorney General and the SEC and has been examining this matter internally. The integrity of the markets is a top priority of Barclays,” the spokesperson said.

The allegations come on top of what have been a torrid few years for the bank which has seen it rocked by a number of scandals. In 2012, Barclays was fined $450 million by US and UK regulators for trying to manipulate LIBOR, which led to the resignations of Barclays chief executive Bob Diamond and chairman Marcus Agius in the UK.

Last month, the UK’s Financial Conduct Authority fined Barclays $43.7 million for failings relating to gold price manipulation carried out by one of its former traders. The financial regulator said Barclays had been fined for failing to adequately manage conflicts of interest between itself and its customers between 2004 to 2013.