Barclays has agreed to pay $19.5 million to resolve a lawsuit brought by shareholders in Manhattan federal court. The shareholders accused the British banking giant of securities fraud, alleging
that the bank sold $17.7 billion more debt than regulators had authorized.
The preliminary settlement for the proposed class action, filed on Tuesday, is subject to approval by U.S. District Judge Katherine Polk Failla.
According to the lawsuit, shareholders claimed financial losses after relying on Barclays' assurances that it adhered to regulatory standards and maintained robust internal controls. The bank admitted in March 2022 that it had sold $15.2 billion in excess structured and exchange-traded notes over the prior five years, exceeding the $20.8 billion limit set by U.S. regulators. In July 2022, Barclays revised the oversold figure to $17.7 billion, offered to repurchase the unauthorized notes, and allocated £1.59 billion ($2.01 billion) to address the issue.
Barclays restated its 2021 financial statements, with executives describing the overissuance as "entirely avoidable" and "self-inflicted." Despite the settlement, the bank denies any wrongdoing, according to the court documents.
The settlement follows a February ruling by Judge Failla, who declined to dismiss the lawsuit. She noted that shareholders could potentially demonstrate that Barclays officials, including former CEO Jes Staley, acted with "actionable recklessness." Failla also pointed out that while Barclays' assurances about its controls appeared generic, they supported the shareholders' claims because the bank’s debt-tracking system "did not just underperform – it did not exist."
The lawsuit covers investors in Barclays' American depositary receipts between February 18, 2021, and February 14, 2023. Jes Staley resigned as CEO in November 2021.
Barclays shares, which have surged 72% year-to-date, were trading 0.3% lower at 08:15 GMT on Wednesday, in line with the FTSE 100 index.
The case is In re Barclays Plc Securities Litigation, U.S. District Court, Southern District of New York, No. 22-08172. Photo by GroupEditor, Wikimedia commons.