Barclays PLC
The British bank admitted to overselling structured products, exceeding the $20.8 billion limit agreed upon with the U.S. Federal Government by $15.2 billion. The products included two exchange traded notes linked to crude oil and market volatility, though the sales of both notes have since been suspended. The products have become increasingly popular among investors amid international volatility stemming from ongoing crises such as Russia's invasion of Ukraine.
The gaffe is a significant blow to new CEO C.S. Venkatakrishnan, who took control after the bank's last chief executive stepped down amid a probe into his ties to Jeffrey Epstein. According to Barclays, regulators are investigating and have reportedly made requests for information already. While the results of a federal probe will take time to materialize, the bank has already felt stiff blowback from the incident.
The $590 million loss stems from Barclays' having to repurchase the sold products at the original price rather than the depreciated value that most are currently trading at. Additionally, Goldman Sachs
The mistake is delaying a planned share buyback that the company intended to perform this quarter. With Barclays now repurchasing the oversold products, the bank has delayed its $1.3 billion worth of buybacks until Q2. Other significant shareholders, such as Blackrock
Wall Street has reacted as one might expect, with Barclays ADRs down 10.6% by market close on Monday. Shares recovered somewhat on Tuesday, gaining 3.3% by noon.
