(Reuters) – Barclays won the dismissal on Friday of two U.S. securities fraud lawsuits stemming from the British bank’s unauthorized sale of $17.7 billion more securities than U.S. regulators allowed.
U.S. District Judge Lewis Liman in Manhattan said investors who acquired Barclays’ iPath Series B S&P 500 VIX Short-Term Future exchange-traded notes (“VXX”) couldn’t sue over general assurances the bank made about its internal controls whilst it issued the notes without the required regulatory approval.
Liman also dismissed similar claims by investors who got caught in a market squeeze when Barclays suspended VXX sales in March 2022, causing the worth of VXX securities that they had sold short to soar 140% above their so-called indicative value.
The judge also found no proof of intent to defraud or conscious recklessness, saying bank officials including former Chief Executive Jes Staley would have been incentivized to register more securities somewhat than let the issue grow.
Barclays’ remedial efforts including the sales halt, disclosures to regulators and the general public, and a buyback offer were “a prudent plan of action that weakens somewhat than strengthens an inference of [intent to defraud],” Liman wrote.
Lawyers for investors in each proposed class actions didn’t immediately reply to requests for comment. Liman’s decisions totaled 111 pages.
Barclays halted VXX sales in March 2022, when it admitted to having sold $15.2 billion more structured notes and ETNs over the prior five years than U.S. regulators allowed.
The bank later boosted the overissuance estimate to $17.7 billion. Barclays executives have called the overissuance “entirely avoidable” and “self-inflicted.”
In September 2022, Barclays reached a $361 million settlement, including a $200 million civil fantastic, with the U.S. Securities and Exchange Commission related to the overissuance.
Barclays agreed in December to pay $19.5 million to settle a related shareholder lawsuit within the Manhattan court.
Staley stepped down because the bank’s chief executive in November 2021.
The cases within the U.S. District Court, Southern District of Latest York are May et al v Barclays Plc, No. 23-02583, and Puchtler v Barclays Plc et al, No. 24-01872.
(Reporting by Jonathan Stempel in Latest York; Editing by Kirsten Donovan)