|
U.S. District Judge Katherine Polk Failla in Manhattan said
shareholders adequately alleged that Barclays' failure to
disclose the absence of internal controls that might have caught
five years of errant debt sales was a material omission of fact.
She also let shareholders try to prove that Barclays and several
officials including former CEO Jes Staley were "actionably
reckless" in assuring that the bank complied with federal
securities laws even as it "blindly" sold the debt.
Bank executives subsequently characterized the overissuance as
an "entirely avoidable" and "self-inflicted" problem that would
not have required "rocket science" to avert.
Barclays declined to comment. Staley's lawyers did not
immediately respond to requests for comment. Lawyers for
shareholders led by the Boston Retirement System pension fund
did not immediately respond to similar requests.
The lawsuit followed Barclays' revelation in March 2022 that it
had sold $15.2 billion more structured and exchange-traded notes
in the prior five years than the $20.8 billion that U.S.
regulators had authorized.
Four months later, the bank increased the oversold amount to
$17.7 billion. It offered to repurchase the excess, and set
aside 1.59 billion pounds ($2 billion) for the overissuance.
In a 57-page decision, Failla said shareholders could sue
Barclays for statements including that the bank was "committed
to operating within a strong system of internal control" and had
policies and procedures that met regulatory standards.
The judge said such statements are often too generic to support
a lawsuit, but Barclays' case had a "critical difference"
because its system for tracking the debt sales "did not just
underperform - it did not exist."
Failla also ruled that shareholders could not pursue a
securities fraud claim over statements that Barclays made after
the overissuances were discovered.
The lawsuit covered shareholder who lost money in Barclays'
American depositary receipts from Feb. 18, 2021 to Feb. 14, 2023
as costs mounted over the blunder.
Staley stepped down as CEO in November 2021.
The case is In re Barclays Plc Securities Litigation, U.S.
District Court, Southern District of New York, No. 22-08172.
(Reporting by Jonathan Stempel in New York; Editing by Kirsten
Donovan and Marguerita Choy)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
