Jefferies Said to Hire Barclays’s Pepe for Electronic Trading

New York Attorney General Eric Schneiderman
New York Attorney General Eric Schneiderman alleged in the lawsuit that Barclays falsely marketed its dark pool as a place where clients were protected from predatory traders. Photographer: Louis Lanzano/Bloomberg

Jefferies Group, the investment bank owned by Leucadia National Corp., hired Chris Pepe from Barclays Plc to expand in electronic trading, according to people with knowledge of the matter.

Pepe is at least the fifth electronic sales-trader or executive that Jefferies hired from the London-based bank within the past year, said the people, who asked not to be identified discussing personnel matters.

All of them joined Jefferies after New York’s attorney general filed a lawsuit in June accusing Barclays’s electronic-trading division of lying to customers and masking the role of high-frequency traders in its private-trading venue, or dark pool. Barclays, whose customers shunned the venue in the days after the lawsuit, has said it did nothing wrong and is contesting the complaint.

Jefferies doesn’t run its own dark pool, one of the people said. The firm’s electronic-trading business gives traders direct access to exchanges around the world, and allows them to trade with algorithms to minimize market impact, according to the bank’s website.

William Bell, formerly head of electronic distribution at Barclays, was hired by Jefferies in July, along with Anthony Pallone, another top sales executive, according to Financial Industry Regulatory Authority records. Daniel Armao, another electronic sales-trader, started in January, while David Green made the switch in November.

Schneiderman Lawsuit

Pepe and Armao didn’t respond to phone and e-mail messages. The other traders declined to comment, as did Mark Lane, a Barclays spokesman in New York.

New York Attorney General Eric Schneiderman alleged in the lawsuit that Barclays falsely marketed its dark pool as a place where clients were protected from predatory traders. Barclays responded in court that prosecutors were taking quotes out of context and that the firm was honest with customers. The bank lost a bid to have the case dismissed in February.

Since the lawsuit was filed, Barclays’s dark pool has dropped from the second-biggest in the U.S. to 11th place, Finra data show. The venue saw 100 million shares of the biggest stocks traded in the week of March 30, down 68 percent from the week before the lawsuit.

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