Barclays Prevails in Two Lawsuits Over $17.7B Securities Overissuance

Core Viewpoint - Barclays PLC successfully dismissed two U.S. securities fraud lawsuits related to the excess debt sale of 17.7 billion beyond regulatory limits, indicating a lack of fraudulent intent and adequate remedial actions taken by the bank [1][4]. Summary by Relevant Sections Lawsuit Details - Investors engaged in short-selling Barclays' iPath Series B S&P 500 VIX Short-Term Futures exchange-traded notes (VXX) claimed monetary losses due to reliance on the bank's assurances regarding internal controls and regulatory compliance [2]. - The lawsuit was triggered by Barclays' failure to comply with regulatory limits and the suspension of VXX issuances in March 2022, which led to a 140% surge in VXX prices over its indicative value [2]. Overissuance and Financial Impact - In March 2022, Barclays acknowledged selling 15.2 billion more structured and exchange-traded notes than the $20.8 billion limit approved by U.S. regulators, which later increased to$17.7 billion [3]. - Barclays set aside £1.59 billion ($2.01 billion) for the overissuance and offered to repurchase the excess amount [3]. Court Ruling and Justifications - The judge ruled that there was no evidence of fraudulent intent by Barclays, stating that bank officials had an incentive to register securities appropriately [4]. - The court found that Barclays' corrective actions, including halting sales and making disclosures, demonstrated good faith rather than deception [5]. Investor Claims and Court Findings - Investor claims of being misled about Barclays' internal controls were rejected, as the court determined that general statements about internal controls were not actionable [6]. Regulatory and Legal Consequences - Barclays paid$361 million in settlement charges to the U.S. Securities and Exchange Commission in September 2022, which included a $200 million fine related to the overissuance [7]. - The company also agreed to a$19.5 million settlement in a separate shareholder lawsuit in December 2022 [7]. Stock Performance - Over the past six months, Barclays shares have increased by 29.5%, outperforming the industry growth of 9.5% [8].