Providence appointed lead plaintiff in suit against Wall Street

Providence Appointed Lead Plaintiff in Suit Against Wall Street for High Frequency Trading Along With Four Additional Plaintiffs;

Groundbreaking Suit Over Billion-Dollar Trading Scheme; U.S. District Court Consolidates Action and Appoints Lead Counsel

- Mayor Angel Taveras announced today that the City of Providence was named Lead Plaintiff in a groundbreaking suit filed in the U.S. District Court for the Southern District of New York against Wall Street for “high frequency trading,” which has cost city, state and U.S. taxpayers estimated billions of dollars.

The Court also appointed Plumbers and Pipefitters National Pension Fund, Employees’ Retirement System of the Government of the Virgin Islands, State-Boston Retirement System, and Första AP-fonden  (Sweden) as Lead Plaintiffs.  The nationally recognized law firms of Robbins Geller Rudman & Dowd LLP, Motley Rice LLC and Labaton Sucharow LLP were appointed Lead Counsel.  The City of Providence initiated the class action suit in April of this year.

“We are holding Wall Street accountable for their actions,” said Mayor Angel Taveras of Providence, Rhode Island.  “We have joined forces with national union leaders and other government agencies to demand justice for investors.”

“City employees and retirees have had their incomes compromised by insider, high-tech schemers, and others.  Given how Americans came to the assistance of Wall Street in 2008, this is even more egregious,” he said.  

“Abuse of the nation’s financial institutions is intolerable and a threat to the basic economic security of this nation,” said Jeffrey Padwa, City Solicitor for the City of Providence.  “We will not idly sit back while Wall Street insiders plunder the incomes of America’s retirees and hard-working taxpayers.”

Five different ways

The complaint filed by Providence in April of this year alleges that public stock exchanges, trading firms and brokerage firms were using high-speed or high-frequency trading to manipulate markets and profit at the cost of institutional and public investors, including Providence’s retirees and others.

The suit alleges these groups had access to information that wasn’t public about investors’ trades which they used to defraud investors and enrich themselves.  They did this in at least five different ways: electronic front-running, rebate arbitrage, slow-market (or latency) arbitrage, “spoofing” and “layering” and “contemporaneous trading.”  In doing so, these Wall Street firms violated the Securities Exchange Act of 1934 and rules promulgated for the U.S. Securities and Exchange Commission.  As important, these firms violated the trust of the American public, substantially profiting at the public’s expense.

The City of Providence was the first city in the nation to file a class action suit on behalf of the retirees and on behalf of other cities, towns and individuals who have been defrauded.  Millions of shares were traded during that five-year period.