A US judge has ruled that Barclays must face a shareholder lawsuit claiming it failed to disclose the absence of internal controls that may have prevented a US$17.7bn debt sale blunder.
In March 2022, Barclays announced it had inadvertently sold US$15.2billion more debt securities than allowed by regulators over the course of the previous five years. It later increased the total oversold amount to US$17.7bn.
A group of US shareholders led by the Boston Retirement System pension fund have accused the bank of securities fraud.
Judge Katherine Polk Failla in Manhattan ruled that shareholders could sue Barclays for making certain statements including that it was “committed to operating within a strong system of internal control” and that it had the relevant regulatory policies and procedures in place.
The judge said that these types of statements are often too generic to support a lawsuit, but Barclays’ case had a “critical difference” because its system for preventing the blunder “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.
Source: Reuters.
