Great Pacific Securities v. Barclays PLC et al

Filing 26

TRANSFER ORDER re: pldg. ( 1 in MDL No. 2589) Transferring 1 action(s) to Judge Jesse M. Furman in the S.D. New York.Signed by Judge Sarah S. Vance, Chair, PANEL ON MULTIDISTRICT LITIGATION, on 12/12/2014. Associated Cases: MDL No. 2589, CAC/8:14-cv-01210, NYS/1:14-cv-02811, NYS/1:14-cv-03133, NYS/1:14-cv-03608, NYS/1:14-cv-04321 (TL)

UNITED STATES JUDICIAL PANEL
on
MULTIDISTRICT LITIGATION

IN RE: BARCLAYS LIQUIDITY CROSS AND
HIGH FREQUENCY TRADING LITIGATION

MDL No. 2589

TRANSFER ORDER

Before the Panel:* Defendants Barclays PLC and Barclays Capital Inc. (collectively Barclays)
move under 28 U.S.C. § 1407 to centralize this litigation in the Southern District of New York. The
litigation consists of the five actions listed on Schedule A. Four of those actions are already pending
in the Southern District of New York, and have been consolidated for all purposes. The fifth action
(Great Pacific Securities) is pending in the Central District of California.
The parties’ positions on the Section 1407 motion vary. Lead plaintiffs (a/k/a “Institutional
Investor Plaintiffs”)1 in the consolidated action support centralization in the Southern District of New
York. The “Exchange defendants,”2 which are not sued in the California action, state that they take
no position on the relatedness of the claims against Barclays, and that they responded to preserve
their rights to argue that the claims against Barclays in the consolidated action should be severed.
If we order centralization, the Exchange defendants argue we should select the Southern District of
New York as transferee district. Finally, the Great Pacific Securities plaintiff opposes centralization
altogether.
The consolidated action and the Great Pacific Securities action share allegations concerning
the operation of the Barclays Liquidity Cross or “LX” dark pool.3 Plaintiffs in both actions assert
that Barclays misrepresented the LX dark pool as a safe haven for investors – a place insulated from

*

Judge Charles R. Breyer and Judge Ellen Segal Huvelle took no part in the decision of this

matter.
1

City of Providence, Rhode Island; Plumbers and Pipefitters National Pension Fund;
Employees’ Retirement System of the Government of the Virgin Islands; State-Boston Retirement
System; and Första Ap-Fonden.
2

The Exchange defendants, which are all the other defendants named in the consolidated
S.D. New York action, are BATS Global Markets, Inc., Chicago Stock Exchange, Inc., Direct Edge
ECN, LLC, The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., New York Stock
Exchange, LLC, and NYSE Arca, Inc.
3

Dark pools are private exchanges or forums for trading securities.

-2aggressive and predatory high frequency trading (HFT) practices. In reality, according to the
complaints, Barclays actively courted HRT firms for the dark pool, providing them with material nonpublic information and associated perks that gave them an unfair advantage over other traders.4
In opposing centralization, the Great Pacific Securities plaintiff argues that its action does
not involve the Exchange Defendants and that it has brought only California law claims, which unlike
the New York federal securities law actions, are not subject to the strictures of the Private Securities
Litigation Reform Act. Plaintiff further contends that there are, in reality, only two actions before
us and thus alternatives to centralization are preferable to creation of an MDL. We find these
arguments unconvincing. As we have stated repeatedly, Section 1407 does not require a complete
identity or even a majority of common factual issues as a prerequisite to centralization. See In re
Darvocet, Darvon & Propoxyphene Prods. Liab. Litig., 780 F. Supp. 2d 1379, 1381 (J.P.M.L. 2011)
(citing cases). The statute also does not require a complete identity of claims or parties. See In re:
Bank of New York Mellon Corp. Foreign Exch. Transactions Litig., 857 F. Supp. 2d 1371, 1373
(J.P.M.L. 2012).5 Finally, even though there are just two actions before us, we are not convinced,
in these circumstances, that alternatives to centralization are preferable to creation of an MDL. The
common factual issues here are sufficiently complex, and the Great Pacific Securities plaintiff, a large
and sophisticated financial services firm, does not seriously dispute that the nexus of this litigation
lies squarely in New York City.
Accordingly, on the basis of the papers filed and the hearing session held, we find that
centralization under Section 1407 in the Southern District of New York will serve the convenience
of the parties and witnesses and promote the just and efficient conduct of this litigation. As explained
above, these actions, both of which are putative nationwide class actions, share factual issues arising
from allegations that Barclays misrepresented its LX dark pool as a safe haven insulated from high
frequency traders. Centralization will eliminate duplicative discovery, prevent inconsistent pretrial
rulings on class certification and other issues, and conserve the resources of the parties, their counsel,
and the judiciary.
After weighing all relevant factors, we select the Southern District of New York as transferee
district for this litigation. Barclays represents that virtually all of its employees responsible for
operating, maintaining, and marketing the LX dark pool are based in Barclays’ New York City office,
and that many of the documents related to the operation and marketing of LX are located there. The
Honorable Jesse M. Furman, to whom we assign the litigation, has been moving the consolidated

4

For example, both complaints allege that Barclays disclosed to HFT firms such things as
the routing logic of Barclays’ order router, the percentage of Barclays’ internal order flow that was
first directed into the LX dark pool, and a breakdown of trades executed in the dark pool by
participant type and “toxicity” level.
5

We have centralized other litigations in which some cases involve federal securities law
claims, and one or more others do not. E.g., In re: JP Morgan Auction Rate Sec. (ARS) Mktg. Litig.,
717 F. Supp. 2d 1374 (J.P.M.L. 2010).

-3action forward, and we have no doubt that he will steer this MDL on a prudent course.
IT IS
THEREFORE ORDERED that the action listed on Schedule A and pending outside the Southern
District of New York is transferred to the Southern District of New York, and, with the consent of
that court, assigned to the Honorable Jesse M. Furman for coordinated or consolidated pretrial
proceedings.

PANEL ON MULTIDISTRICT LITIGATION

Sarah S. Vance
Chair
Marjorie O. Rendell
R. David Proctor

Lewis A. Kaplan
Catherine D. Perry

IN RE: BARCLAYS LIQUIDITY CROSS AND
HIGH FREQUENCY TRADING LITIGATION

MDL No. 2589

SCHEDULE A

Central District of California
GREAT PACIFIC SECURITIES v. BARCLAYS PLC, ET AL., C.A. No. 8:14-01210
Southern District of New York
CITY OF PROVIDENCE, RHODE ISLAND v. BATS GLOBAL
MARKETS, INC., ET AL., C.A. No. 1:14-02811
AMERICAN EUROPEAN INSURANCE COMPANY v. BATS
GLOBAL MARKETS, INC., ET AL., C.A. No. 1:14-03133
HAREL INSURANCE CO, LTD. v. BATS GLOBAL
MARKETS, INC., ET AL., C.A. No. 1:14-03608
FLYNN, ET AL. v. BANK OF AMERICA CORPORATION, ET AL.,
C.A. No. 1:14-04321