New | UK bank Barclays must face US fraud lawsuit tied to trading probe

Barclays has failed to persuade a US judge to dismiss a lawsuit accusing the British bank of defrauding shareholders about a private "dark pool" trading platform even as it publicly pledged to clean up its corporate culture.

US District Judge Shira Scheindlin in Manhattan allowed most of the lawsuit brought on behalf of investors in Barclays' American depositary shares to go forward.

The bank's share price slid 7.4 per cent on the day in June when New York attorney general Eric Schneiderman accused Barclays in his own lawsuit of concealing how it favoured high-speed traders in its dark pool, known as Barclays LX, and understated their activity.

Shareholders led by Mohit Sahni and Joseph Waggoner accused Barclays of falsely touting the safety of Barclays LX, even as it promised governance reforms in the wake of its US$453 million settlement in June 2012 of regulatory charges that it rigged the London interbank offered rate.

Scheindlin said the lawsuit "adequately alleges Barclays' past scandals, its efforts to restore its reputation and, most significantly, misrepresentations that go to the heart of the firm's integrity and reputation".

"I cannot conclude as a matter of law that there is not a substantial likelihood that a reasonable shareholder would consider the misrepresentations about LX important in deciding how to act," she wrote in her decision published on Friday.