The lawsuit filed by New York Attorney General Eric Schneiderman against Barclays for ‘pernicious fraud’ in the operation of its dark pool sent shock waves through Wall Street yesterday.

The equity valuations for a number of large Wall Street banks declined significantly under the premise that this lawsuit will impact their own business operations in a negative fashion.

Beyond that, though, many might think serious allegations of lying, blatant misrepresentations, fraud, self-dealing, predatory practices aka high frequency trading, investor abuse, and the like mean one thing: just another day on Wall Street.

Let’s play hardball today and navigate a little bit deeper.

While many will focus on the practices exposed by this lawsuit, I am much more interested in the players. Why is it that the New York Attorney General is bringing this action rather than the Wall Street’s cops at Finra and/or the SEC?

We learn from this lawsuit that the NY AG’s office launched an initiative that ultimately led to this suit over a year ago. But let’s go back even further than that. In January 2013 — (yes, January 2013 a full 18 months ago), The Wall Street Journal wrote a commentary entitled, Vow of New Light for ‘Dark’ Trades and highlighted the following:

A top U.S. regulator plans to shine a light on dark pools, private trading venues that allow buyers and sellers to post orders that are hidden from the rest of the market.

Richard Ketchum, chief executive of the Financial Industry Regulatory Authority, said in an interview Tuesday that the regulator is expanding its oversight of the dark-trading venues, with an eye on whether orders placed in public exchanges are “trying to move prices or encourage sellers that may advance their trading in the dark market.”

The regulator also is boosting its surveillance of high-speed trading and is increasingly looking at rapid-fire trading across exchanges, he said. “You’re going to see more [focus] in those areas in 2013,” Mr. Ketchum said.

Experts said regulators have lagged behind rapid advances in computer-trading technology in recent years, leaving investors in the dark about how the market operates.

Regulators are scrambling to catch up, however. Finra on Tuesday said it implemented a system in 2012 that can track trading patterns that “address more than 50 threat scenarios” across about 80% of the stock market.

The question both begs and screams, if Finra was talking about shining a light on dark pools in January 2013, then what happened?

“WHERE THE HELL HAVE FINRA AND THE SEC BEEN IN TERMS OF PROVIDING MEANINGFUL INVESTOR PROTECTION AGAINST THE PRACTICES DESCRIBED IN THE NYAG LAWSUIT?”

Regular readers of this blog and my book know the answer to that question. The cops at Finra and the SEC are ‘in bed with Wall Street.’

The media and pols might feign disgust over the allegations of lying, blatant misrepresentations, fraud, self-dealing, predatory practices, investor abuse and the like embedded within this lawsuit against Barclays.

How pathetic.

If those within the fourth estate and atop Capitol Hill cared to look inside the pages of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, they would see that iterations of the same destructive practices have transpired within the regulators themselves.

Navigate accordingly.

Larry Doyle