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Barclays has referred to as on the Excessive Courtroom in London to slash the worth of a £560mn lawsuit from buyers by placing out the claims of passive funds over a drop in its share worth triggered by regulatory scrutiny of its “darkish pool” buying and selling alternate.
Scores of funding funds are suing Barclays, arguing the financial institution’s share worth had been “artificially inflated” by “false representations” the lender had made about its darkish pool alternate that permits trades to be performed in non-public.
Legal professionals appearing for Barclays argued that passive funds, that are participating within the litigation, couldn’t be stated to have been misled by the financial institution and shouldn’t be capable of sue as they’d not learn disclosures made by the lender. Passive funds purchase shares mechanically primarily based on inclusion in market indices.
Helen Davies KC, representing the financial institution, advised the courtroom that the claimants’ case had a “elementary deficit”.
However Jonathan Nash KC, appearing for the shareholders, stated in written arguments that each one buyers, whether or not energetic or passive, are “entitled to and do” commerce on the premise that share costs incorporate “all materials info”.
The decide’s determination will assist decide if index monitoring funds can take part in different lawsuits which might be piling up in opposition to UK corporations over share worth declines.
Shareholders in Barclays filed a lawsuit in opposition to the financial institution in London in 2020, arguing it had made “unfaithful” or “deceptive” statements to the market.
It’s one in all a number of fits which have been filed within the Excessive Courtroom in opposition to London-listed corporations together with Glencore and Customary Chartered, that are additionally contesting them.
The financial institution is contesting the lawsuit and desires the courtroom to strike out the claims of 242 funds and sub-funds which might be valued at about £330mn — greater than half the entire £560mn in opposition to it.
Passive funds managed by Amundi and State Road are amongst buyers suing Barclays over losses that shareholders sustained a decade in the past.
About £2.5bn was wiped off Barclays’ market capitalisation on a single day in 2014 after US regulators sued the financial institution for allegedly favouring high-speed merchants on its darkish pool in opposition to the pursuits of institutional buyers.
Eric Schneiderman, New York’s then attorney-general, claimed on the time that the financial institution’s darkish pool was “stuffed with predators — there at Barclays’ invitation”.
Barclays agreed in 2016 to pay $70mn to the Securities Trade Fee and Schneiderman’s workplace as a part of a settlement through which it additionally admitted to creating materials misrepresentations.
Most shareholder lawsuits have settled earlier than trial, that means there may be little authorized precedent in England and Wales on a number of essential points in such instances, together with the standing of passive funding funds, which have turn into massive holders of UK shares.