Barclays Faces Epstein Fallout As Former CEO Faces Trial

by Murtuza J Merchant Benzinga Staff Writer

Barclays BCS and its former CEO Jes Staley will have to defend themselves in a U.S. court over accusations that they misled shareholders about Staley's relationship with the late financier Jeffrey Epstein.

A federal judge in Los Angeles ruled that there was sufficient ground for the case to proceed, allowing investors to pursue claims that the bank and its former chief intentionally concealed key information to safeguard Barclays’ reputation and stock value, Reuters reported.

The class-action lawsuit, led by pension funds from New York and St. Louis, focuses on the period between July 22, 2019, shortly after Epstein's arrest, and October 12, 2023.

Investors argue that Barclays continued to make misleading public statements even after the bank discovered emails suggesting Staley had described Epstein as being “like family.”

The complaint points to repeated assurances from Barclays indicating Staley's interactions with Epstein were strictly professional.

Shareholders also challenge statements suggesting the British Financial Conduct Authority's investigation was limited to whether Staley knew about Epstein's alleged crimes, and not whether he witnessed them.

While U.S. District Judge Maame Ewusi-Mensah Frimpong allowed the core fraud claims against Barclays and Staley to proceed, she limited some parts of the case brought against Barclays Chairman Nigel Higgins.

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Neither Staley's legal team nor lawyers representing Barclays and Higgins provided comments when contacted on Thursday.

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The attorneys representing the shareholders also declined to immediately respond.

Jes Staley, who served as Barclays CEO from 2015 until 2021 and was previously a senior executive at JPMorgan Chase JPM, lost his appeal in London on Thursday against a potential ban from the financial sector.

The UK's Financial Conduct Authority had proposed the ban last year, accusing him of misleading regulators about the nature of his Epstein connections.

Staley has consistently denied knowing about Epstein's criminal activities and said he had no memory of certain compromising emails.

Epstein, arrested on sex trafficking charges in July 2019, died in his Manhattan jail cell five weeks later.

The case is Merritt v. Barclays Plc et al., filed in the U.S. District Court for the Central District of California under case number 23-09217.

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