Investors thought they were diving into "safe waters" when using the so-called dark pool at Barclays, but those waters were "full of predators," New York Attorney General Eric Schneiderman told CNBC on Thursday.
"Dark pools theoretically are places where large investors will go to protect themselves from high-frequency traders because there's less disclosure," he said. "A lot of these are big funds that are, in fact, trading for average people on the street. They're trading for pension funds."
Schneiderman announced Wednesday a lawsuit against Barclays—accusing the British bank of giving an unfair edge in the U.S. to high-frequency trading clients, even as it claimed to be protecting large investors from such traders.
"This is supposedly a way that high-frequency traders can't tell what you're doing," he said. "We found in this case that in fact Barclays [was] providing huge informational advantages to high-frequency traders and deceiving ordinary investors about how safe the pool was."