Barclays Agrees To $19.5 Million Aettlement In US Court Over Debt Sale Blunder

Barclays agrees to $19.5 million settlement in US court over debt sale blunder

British bank, Barclays Plc Securities has agreed to pay $19.5 million to settle a lawsuit in the US District Court, Southern District of New York by shareholders who accused it of securities fraud after it sold $17.7 billion more debt than allowed by the regulators.

A preliminary settlement of the proposed class action suit requires the approval of Judge Katherine Polk Failla. Shareholders claimed they lost money by relying on Barclays' assurances that its policies and procedures met regulatory standards and that the bank was committed to strong internal controls.

In March 2022, Barclays admitted to selling $15.2 billion more structured and exchange-traded notes in the prior five years than the  $20.8 billion authorized by the regulators.

However, 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 ($2.01 billion) for the over-issuance. The company restated its 2021 financial statements, and the executives characterized the over-issuance as an ‘entirely avoidable’ and ‘self-inflicted’ issue. But Barclays denies wrongdoing in its settlement.

Early this year, Judge Failla had refused to dismiss the lawsuit, stating that shareholders could try to prove that Barclays officials, including former CEO Jes Staley (who stepped down in November 2021), were ‘actionably reckless’. She added that while the assurances were generic, the company could support the shareholders' claims because the bank's system for tracking debt sales "did not just underperform - it did not exist."