Barclays stockholders sue US over $17.6 billion debt sale blunder

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By Jonathan Stamp

NEW YORK (Reuters) – Barclays Plc was indicted Friday in a proposed US class action in which shareholders claimed to have been defrauded over the sale by the British bank of $17.6 billion more debt than regulators had allowed.

A lawsuit filed in the US District Court in Manhattan by two Florida pension schemes seeks to hold Barclays responsible for the price drops of his US certificates (ADR), as the blunder has increased costs.

According to the complaint, Barclays made “materially false and misleading” assurances in its annual reports that its internal controls over financial reporting were effective.

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It also said the bank overstated profits and underestimated operating and “lawsuit and conduct” costs by not disclosing the over-issuance in its 2021 earnings releases.

“The lack of controls to compare the number of securities issued against the number of securities registered is such a basic failure of internal control that it is so obvious that it is deliberately reckless,” the complaint said.

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

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

Barclays offered to buy back the excess securities, saying on July 28 that it was setting aside approximately £1.59 billion (now $1.73 billion) in connection with the over-issuing.

The bank said on Sept. 15 that investors had filed claims covering $7 billion of the securities.

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Friday’s lawsuit by the City of North Miami Beach Police Officers’ and Firefighters’ Retirement Plan and 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 City of North Miami Beach Police Officers’ and Firefighters’ Retirement Plan et al v. Barclays Plc et al, US District Court, Southern District of New York, No. 22-08172.

($1 = 0.921 pounds)

(Reporting by Jonathan Stempel in New York; editing by Chris Reese)

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