Barclays not liable to patrons of U.S. IPO earlier than 2008 disaster: appeals courtroom

NEW YORK (Reuters) – Barclays Plc (BARC.L) just isn’t liable to buyers who purchased its U.S.-listed inventory a couple of months earlier than the 2008 monetary disaster and accused the British financial institution of hiding its dangerous debt publicity and a capital shortfall, a U.S. courtroom dominated on Monday.

FILE PHOTO: A department of Barclays financial institution is seen in central London on this {photograph} dated October 22, 2014. REUTERS/Toby Melville

In a 3-Zero resolution, the 2nd U.S. Circuit Court docket of Appeals in Manhattan upheld the dismissal of claims in opposition to Barclays and underwriters led by Citigroup Inc (C.N) over the British financial institution’s April 2008 sale of $2.5 billion of American depositary shares. Barclays’ share value had fallen 80 % by the next March.

The 9-1/2-year-old case is among the many final ones accusing large banks of getting inflated their share costs by hiding or failing to repair soured credit on their stability sheets earlier than the disaster.

Barclays was accused of concealing 21.6 billion kilos (then about US$42 billion) of mortgage-backed securities and different dangerous belongings insured by monoline insurers, and a March 2008 “directive” by the U.Ok. Monetary Providers Authority requiring it to lift extra fairness capital.

Barclays might need had an obligation to reveal its monoline publicity, however “resoundingly” confirmed that its omission had little or no influence on its share value, the appeals courtroom mentioned.

A regulator’s “expressions of issues a couple of financial institution’s monetary standing and vigorous requests – even when expressed urgently – to be saved apprised of the financial institution’s contingency plans” didn’t qualify as a “directive,” the courtroom dominated.

Joseph Daley, a lawyer for the plaintiffs, didn’t instantly reply to requests for remark. Barclays spokesman Andrew Smith declined to remark.

The choice on Monday affirmed a September 2017 ruling by U.S. District Decide Paul Crotty in Manhattan.

Crotty mentioned the collapse of Lehman Brothers Holdings Inc, the bailout of insurer American Worldwide Group Inc (AIG.N), and capital raisings by different British banks may additionally have contributed to Barclays’ falling share value.

The case is In re: Barclays Financial institution Plc Securities Litigation, 2nd U.S. Circuit Court docket of Appeals, No. 17-3293.

Reporting by Jonathan Stempel in New York; Enhancing by Jeffrey Benkoe

Author: Maxwell C.

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