Barclays Plc (BCS – Free Report) will face a proposed class action by shareholders, accusing the bank of securities fraud related to the sale of debt in excess of what was allowed by regulators.
This means that the securities Barclays issued in previous years were not registered with the Securities and Exchange Commission (“SEC”).
U.S. District Judge Katherine Polk Failla in Manhattan said shareholders adequately alleged that Barclays’ failure to disclose internal controls failures, which led to five years of unregistered securities sales of $17.7 billion, was an important omission of fact. Shareholders could also proceed with claims that executives had been careless in reassuring investors about the bank’s compliance with securities laws.
In 2022, the bank agreed to pay $361 million to resolve civil claims by the SEC over the matter. The shareholders, who are seeking to represent buyers of the company’s American Depositary Receipts from February 2021 to February 2023, claimed that the matter resulted in a drop in the stock price.
In March 2022, BCS said that it expected to incur a £450-million loss for issuing structured products in excess of what it had registered for sale. The bank revealed that it registered with U.S. regulators for the sale of investment products worth up to $20.8 billion in August 2019 but ended up issuing products worth $36 billion. In July, it increased the oversold amount by $2.4 billion.
BCS had offered to buy back the excess securities. On July 28, 2022, it said it had kept £1.59 billion for the over-issuance.
On Sep 15, 2022, BCS said that investors submitted claims covering $7 billion of the securities.
Over the past year, BCS shares have gained 1.8% compared with the 8.9% rise of the industry.
Currently, BCS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Malpractices by Other Firms
A class-action lawsuit has been filed by five customers against JPMorgan (JPM – Free Report) , claiming that the bank charged unconscionable fees for unintentionally depositing checks that bounced.
Per the suit filed in the White Plains, New York federal court, JPM charged customers up to $30 for a “deposited item return fee” after checks they tried to deposit bounced for no fault of theirs.JPM’s customers called the bank’s “junk fees” for returned checks “predatory.” The customers cited an October 2022 U.S. Consumer Financial Protection Bureau (“CFPB”) bulletin that said that indiscriminately charging such fees was likely illegal.
HSBC Holdings plc (HSBC – Free Report) was fined £57.4 million by Bank of England (“BoE”) for “serious failings” over its measures to protect customer deposits between 2015 and 2022. The fine is the second-biggest fine ever imposed by the regulator, which reflects the seriousness of the failings.
BoE’s Prudential Regulation Authority said that HSBC failed to accurately identify deposits eligible for Britain’s Financial Services Compensation Scheme, which protects up to £85,000 in customer bank accounts.
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