Barclays pays USD 19.5 million settlement on debt sale blunder

A preliminary settlement of the proposed class action was filed on Tuesday, 3rd December, and requires approval by the US District Judge Katherine Polk Failla.

Details on the lawsuit

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. This lawsuit covered investors in Barclays’ American depositary receipts from 18 February 2021 to 14 February 2023.

In February 2024, the US District Judge Katherine Polk Failla refused to dismiss the lawsuit, claiming that shareholders could try to prove that Barclays officials were reckless. She also mentioned that the shareholder’s claims were supported, as the bank lacked a system for tracking debt sales.

Barclays continues to deny its wrongdoing in connection with the settlement, according to the court document filed on Tuesday, December 3rd, in the Manhattan federal court.

The bank’s shares have surged 72% so far this year and were trading 0.3% down at 08:15 GMT on Wednesday, in line with the FTSE 100.

Barclays’ previous legal challenges

The bank admitted that in March 2022 it sold USD 15.2 billion more structured and exchange-traded notes in the prior five years than the amount authorised by the US regulators, which is USD 20.8 billion.

In July 2022, the bank increased the oversold amount to USD 17.7 billion, offered to repurchase the excess, and set aside USD 2.01 billion for the overissuance.

Barclays also restated its 2021 financial statement, with its executives claiming the overissuance as an ‘entirely avoidable’ and ‘self-inflicted’ problem.