Barclays has reached a $19.5 million settlement to resolve a class-action lawsuit filed by shareholders who accused the British bank of securities fraud after it oversold $17.7 billion in debt beyond the limit set by U.S. regulators. The settlement, which was filed on Tuesday in Manhattan federal court, is still pending approval by U.S. District Judge Katherine Polk Failla.
The legal action stemmed from allegations that shareholders lost money by trusting Barclays’ assurances that its internal policies and procedures adhered to regulatory standards. They argued that the bank misrepresented its commitment to strong internal controls, which ultimately led to the debt overissuance.
In March 2022, Barclays admitted to selling $15.2 billion more than the $20.8 billion allowed by U.S. regulators over a five-year period. This number was later revised upwards to $17.7 billion, prompting the bank to offer to repurchase the excess debt. Barclays also set aside £1.59 billion ($2.01 billion) to cover the overissuance and restated its 2021 financial statements. Bank executives referred to the overissuance as an “entirely avoidable” and “self-inflicted” issue.
Despite agreeing to settle, Barclays has continued to deny any wrongdoing in connection with the case. According to the court filing, the bank’s stance is that the errors were unintentional, but it chose to settle the matter in the interest of putting the legal issue behind it.
In February 2024, U.S. District Judge Failla denied Barclays’ attempt to have the lawsuit dismissed. She noted that shareholders could potentially prove that former executives, including ex-CEO Jes Staley, acted “recklessly” by failing to properly manage the bank’s debt sale procedures. Failla also highlighted that Barclays’ system for tracking debt sales was not merely inadequate but “did not exist.”
The lawsuit covers investors who held Barclays’ American depositary receipts from February 18, 2021, to February 14, 2023. While Barclays’ shares have seen a significant increase of 72% this year, they were down by 0.3% as of Wednesday morning, in line with the broader FTSE 100 index.
The legal case is titled In re Barclays Plc Securities Litigation, and is being heard in the U.S. District Court for the Southern District of New York under case number 22-08172.
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