(Reuters) – Barclays received the dismissal on Friday of two U.S. securities fraud lawsuits stemming from the British financial institution’s unauthorized sale of $17.7 billion extra securities than U.S. regulators allowed.
U.S. District Choose Lewis Liman in Manhattan stated buyers who acquired Barclays’ iPath Collection B S&P 500 VIX Brief-Time period Future exchange-traded notes (“VXX”) couldn’t sue over basic assurances the financial institution made about its inner controls even because it issued the notes with out the required regulatory approval.
Liman additionally dismissed comparable claims by buyers who acquired caught in a market squeeze when Barclays suspended VXX gross sales in March 2022, inflicting the worth of VXX securities they’d offered brief to soar 140% above their so-called indicative worth.
The choose additionally discovered no proof of intent to defraud or acutely aware recklessness, saying financial institution officers together with former Chief Government Jes Staley would have been incentivized to register extra securities slightly than let the issue develop.
Barclays’ remedial efforts together with the gross sales halt, disclosures to regulators and the general public, and a buyback provide had been “a prudent plan of action that weakens slightly than strengthens an inference of [intent to defraud],” Liman wrote.
Legal professionals for buyers in each proposed class actions didn’t instantly reply to requests for remark. Liman’s selections totaled 111 pages.
Barclays halted VXX gross sales in March 2022, when it admitted to having offered $15.2 billion extra structured notes and ETNs over the prior 5 years than U.S. regulators allowed.
The financial institution later boosted the overissuance estimate to $17.7 billion. Barclays executives have known as the overissuance “fully avoidable” and “self-inflicted.”
In September 2022, Barclays reached a $361 million settlement, together with a $200 million civil advantageous, with the U.S. Securities and Trade Fee associated to the overissuance.
Barclays agreed in December to pay $19.5 million to settle a associated shareholder lawsuit within the Manhattan court docket.
Staley stepped down because the financial institution’s chief govt in November 2021.
The instances within the U.S. District Court docket, Southern District of New York are Might et al v Barclays Plc, No. 23-02583, and Puchtler v Barclays Plc et al, No. 24-01872.
(Reporting by Jonathan Stempel in New York; Modifying by Kirsten Donovan)