Providence, R.I., is suing dozens of Wall Street banks and other financial companies over high-frequency trading.
The federal complaint was filed Friday in New York on behalf of city investment funds that traded stocks in the U.S. since April 18, 2009.
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It claims that stock exchanges, investment banks and others defrauded the city, which managed funds on behalf of active and retired city employees, by manipulating market data in favor of split-second stock-trading firms.
The lawsuit comes amid heightened government scrutiny into whether advantages in computer hardware and placement enable some to get millisecond timing advances on trades.
The lawsuit asserts that the defendants routinely engaged in "manipulative, self-dealing and deceptive conduct," including brokerage firms providing details of their clients' offers on stocks to high-speed trading firms, which would then trade against them.
The complaint also focused on the practice of high-speed trading itself. The city claims that the high-frequency trading firms named in the lawsuit reaped illicit profits by learning about changes in the price of a stock trading in one exchange and then picking off orders for the stock in another exchange before the exchanges were able to update their own bids and offers.
In the five-year period covered in the lawsuit, Providence asserts its investors made trades involving 26 million shares for a total value of about $611 million.
The lawsuit seeks compensatory damages, plus interest, to be determined at trial, in addition to restitution for investors, among other penalties.
Among the defendants named in the lawsuit are the Nasdaq Stock Market and the New York Stock Exchange; major banks such as JPMorgan Chase, Goldman Sachs and Citigroup; and trading firms including Chopper Trading and Jump Trading.
Representatives of JPMorgan, Goldman and Citigroup each declined to comment on the lawsuit.
An email to Jump Trading was not immediately returned.
Calls to Chopper Trading went unanswered late Friday.