( BARC.L ) was sued on Friday in a proposed U.S. class-action lawsuit in which shareholders say they were defrauded when the British bank sold $17.6 billion more debt than regulators allowed.
A complaint filed by two Florida pension plans in US District Court in Manhattan seeks to hold Barclays liable for falling prices of American Depositary Receipts (ADRs) as costs rise due to the mistake. The complaint said Barclays made “materially false and misleading” representations in its annual reports that its internal control over financial reporting was effective. It also said the bank overstated profits and understated operating and “litigation and litigation costs” by failing to overstate its 2021 earnings release.
“The failure of the controls to account for the number of securities issued versus the number of securities registered is such a basic internal control failure that it is as obvious as willful negligence,” the complaint said. Barclays declined to comment. CEO C.S. Venkatakrishnan and his predecessor Jes Staley are among the other defendants. The bank disclosed in March that it sold $15.2 billion more in structured and exchange-traded notes than the $20.8 billion US regulators allowed. In July, the bank increased the overselling amount by $2. billion.
Barclays offered to buy back excess securities and announced on July 28 that it would set aside about £1.59 billion (currently $1.73 billion) in connection with the matter. On September 15, the bank announced that investors submitted claims for securities worth 7 billion dollars.