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Barclays securities class action overview:
- Who: Two Barclays customers are suing the bank.
- Why: The plaintiffs claim they were tricked into buying unregistered securities through the bank.
- Where: The Barclays securities class action was filed in a New York federal court.
A pair of Barclays customers are suing the bank, claiming they were sold unregistered securities and that the company won’t give them their money back after it was caught out.
Plaintiffs Ruth C. May and Donna E. Ledgerwood filed the class action lawsuit against Barclays PLC on March 28 in a New York federal court, alleging violations of the Securities Act.
According to the lawsuit, both of the investors bought thousands of dollars’ worth of unsecured debt securities called exchange traded notes (ETNs) from their IRA accounts.
They say that, since 2017, Barclays has had stringent restrictions on how it sells securities, after agreeing to pay $97 million to settle a Securities Exchange Commission (SEC) enforcement action alleging Barclays Capital Inc. overcharged investment clients.
After that, Barclays was required to define and designate the number of securities it planned to register and issue, pay the registration fees upfront and have “robust internal controls” to make sure it doesn’t issue unregistered securities, the lawsuit states.
However, in 2018, Barclays continued to file more than $40 billion in securities that did not follow these requirements in 2018 and 2019, the plaintiffs allege.
While it created a working group to track the securities sold under those registrations, no one was actually tracking the sales, the investors say.
Barclays did not offer rescission on all securities, lawsuit claims
When the SEC found out, Barclays agreed to pay $361 million in civil penalties, disgorgement and prejudgment interest, the lawsuit states. It also offered a rescission—or voiding—of all securities that had been issued without the proper registration statement, but said that wouldn’t apply to those who bought ETNs, the lawsuit alleges.
May and Ledgerwood had bought thousands of dollars worth of ETNs from Barclays, they claim.
They both applied for the rescission offer, filing nine separate claims each before the deadline, they say, but all were declined.
“Plaintiffs believe that discovery will allow them to trace their shares to Barclays internal documents, and an analysis will show which ETNs were sold without a valid registration statement,” the investors say. “However, Barclays has not published the information.”
The plaintiffs want to represent a nationwide class of investors who bought the securities at issue between June 26, 2019, and March 14, 2022. They are suing under the Securities Act and seek rescissionary and compensatory damages, fees, costs and a jury trial.
Meanwhile, a combined $1.8 billion in settlements have been reached with 15 broker dealers and an affiliated investment adviser accused of failing to prevent their workers from using unauthorized messaging apps—such as WhatsApp—on personal cell phones to discuss work-related matters.
What do you think of the allegations against Barclays in this case? Let us know in the comments!
The investors are represented by Mazin A. Sbaiti of Sbaiti & Co. PLLC.
The Barclays class action lawsuit is Dr. Ruth C. May et al. v. Barclays PLC et al., Case No. 1:23-cv-02583, in the U.S. District Court for the Southern District of New York.
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