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Barclays (BCS) Fails to Get Rid Of Dark Pool Class Action

Barclays PLC BCS was unsuccessful in convincing the U.S. appeals court to undo the class action lawsuit that accused it of cheating its shareholders with regard to the private trading platforms or dark rooms, as per a Reuters report.

Per the decision passed yesterday, the second U.S. Circuit Court of Appeals in New York allows investors in Barclays' American depository shares to take legal action against the bank as a group. Class action means that complainants are allowed to recover more money from the bank than they could individually recover by suing the bank. It is a collective effort by all the investors, who were cheated.

In February 2016, Barclays agreed to settle probes by U.S. regulators related to their dark pools. Per the settlement terms with the U.S. Securities and Exchange Commission (“SEC”) and the New York Attorney General (“NYAG”), they had to pay $70 million in fine, to be equally divided between the SEC and the NYAG.

The probes pertained to allegations that Barclays had made false representations about protecting investors’ interest in the dark pools from high-frequency traders. Notably, Barclays was sued by the NYAG in June 2014 over the issue, which led to a 7.4% fall in stock price the next day. Thus, as per Circuit Judge Christopher Droney, the class action was the correct verdict because investors suffered as a result of a sudden decline in the stock price.

The lawsuit had accused Barclays of misleading investors by presenting tampered information and assuring them that their orders were spread across trading exchanges. The company had instead channeled maximum orders into the dark pool without informing investors about the same.

Shares of Barclays have gained 4.2% over the last 12 months, underperforming the industry’s rally of 23.1%.

Currently, Barclays carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks in the same space are KB Financial Group, Inc. KB and Erste Group Bank AG EBKDY, each sporting a Zacks #1 Rank, and The Bank of N.T. Butterfield & Son Limited NTB carrying a Zacks #2 Rank (Buy).

KB Financial has witnessed an upward earnings estimate revision of 11.1% for 2017, over the past 30 days. Its share price has risen 45.4% over the past 12 months.

For Erste Group, over the past 30 days, the Zacks Consensus Estimate has been revised 19.2% upward for 2017. Its share price has increased 42.7% over the past 12 months.

Bank of N.T. Butterfield & Son has witnessed an upward earnings estimate revision of 2.2% for 2017, over the past 30 days. Over the past 12 months, its share price is up 24.8%.

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Barclays PLC (BCS): Free Stock Analysis Report
KB Financial Group Inc (KB): Free Stock Analysis Report
Erste Group Bank AG (EBKDY): Free Stock Analysis Report
Bank of N.T. Butterfield & Son Limited (The) (NTB): Free Stock Analysis Report
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