Barclays shareholders sue in US over $17.6bn debt sale mistake

A branch of Barclays Bank is seen, in London, Britain February 23, 2022. REUTERS/Peter Nicholls

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NEW YORK, Sept 23 (Reuters) – Barclays Plc (BARC.L) was sued on Friday in a proposed class action lawsuit in the United States in which shareholders claimed they were defrauded in connection with the sale by the British bank with $17.6 billion more debt than regulators had allowed.

A lawsuit filed in U.S. District Court in Manhattan by two Florida pension plans seeks to hold Barclays liable for lowering the prices of its U.S. certificates of deposit (ADRs) as costs rose following the blunder.

The complaint said Barclays made “materially false and misleading” assurances in its annual reports that its internal controls over financial reporting were effective.

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He also said the bank overstated earnings and understated operating and “litigation and conduct” expenses, failing to disclose the overissue in its 2021 earnings releases.

“The failure to have controls in place to account for the number of securities issued against the number of securities registered is such a basic failure of internal control that is so evident that it is deliberately imprudent,” the complaint states.

Barclays declined to comment. Chief executive CS Venkatakrishnan and his predecessor Jes Staley are among the other defendants.

The bank disclosed in March that it had sold $15.2 billion more in structured and exchange-traded notes than the $20.8 billion allowed by US regulators. In July, the bank increased the oversold amount by $2.4 billion. Read more

Barclays offered to repurchase the excess securities and on July 28 said it had set aside approximately 1.59 billion pounds (now $1.73 billion) related to excess issuance. Read more

The bank said on September 15 that investors had submitted claims covering $7 billion in securities. Read more

Friday’s lawsuit filed by the City of North Miami Beach Police and Fire Officers Retirement Plan and the City of North Miami Beach General Employees Retirement Plan seeks damages for Barclays ADR holders from February 18, 2021 to March 25, 2022.

The case is the City of North Miami Beach Police and Fire Officers Retirement Plan et al v. Barclays Plc et al, US District Court, Southern District of New York, No. 22-08172.

($1 = 0.921 pounds)

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Reporting by Jonathan Stempel in New York Editing by Chris Reese

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