EWJ FEB 59 2025 web - Flipbook - Page 15
Barclays v The Financial
Conduct Authority
By Ausaf Abbas Experienced Investment Banking Expert of Expert Evidence
International Limited. Previously Ausaf has worked for Merrill Lynch and Morgan Stanley.
In November 2024, the Financial Conduct Authority
(FCA) confirmed a £40 million1 fine following the
withdrawal of the appeal by Barclays (the ‘Bank‘) to
the Upper Tribunal. The offence was that Barclays
had failed to disclose arrangements with Qatari entities during its two capital fundraising efforts in 2008.
This penalty underscores the importance of transparency and integrity in financial dealings, especially
during periods of economic instability.
investors in the fund raisings were not afforded any
similar offer and hence ended up effectively paying a
substantially higher price per share.
The Listing Rules (principally LR 1.3.3R) provide that
“An issuer must take reasonable care to ensure that
any information if notifies to a [Regulated Information Service] or makes available through the
[Authority] is not misleading, false, or deceptive and
does not omit anything likely to affect the import of
the information.” The FCA deemed the failure to
disclose the details of the advisory agreements to
have breached the Listing Rules and the lack of transparency as “reckless and lacking integrity”, emphasizing that such undisclosed payments deprived other
investors in the fund raisings and the market of
crucial information.
During the 2008 financial crisis, Barclays carried out
two financings to boost its capital in order to avoid a
government bailout which many banks had required
as the Global Financial Crisis took hold. In the UK it
was notable that both RBS/NatWest and Lloyds had
been required to take
funding from the British
Government. In a June
The £40 million fine reflects
2008 financing Barclays
the FCA’s commitment to enraised £4.5 billion, and
forcing transparency and acthen sought to avoid the
countability
within
the
(Fear the Danaans even when bearing gifts!)
bailout terms being imfinancial sector. By penalizing
Laocoön
posed by the GovernBarclays for its past misconment via an October
duct, the FCA aims to deter
2008 financing, which raised a further £7.3 billion. In
similar behaviour in the future and to promote a
both transactions the Bank secured substantial investculture of integrity among financial institutions. This
ments from Qatari entities, including Qatar Holdings,
action serves as a reminder to all banks of the critical
as well as from other parties which participated.
importance of full disclosure and ethical conduct,
particularly during times of financial distress.
Alongside both financings Barclays entered into
In response to the fine, Barclays expressed its
advisory service agreements with associated Qatari
disagreement with the FCA’s findings but chose not to
entities, but failed to disclose the £322 million in fees
contest the penalty, indicating a desire to move
paid. Barclays claimed that these were “legally
forward and focus on current operations.
separate” contracts from the fund raising, but the FCA
argued the advisory agreements were an absolutely
It is particularly relevant that the Upper Tribunal had
integral part of the commercial package the Qataris
required John Varley, the Group Chief Executive
required to participate in the two capital raisings and
Officer of the Bank at the time, to give evidence at the
the associated fees should have been disclosed to the
hearing. Mr Varley had personally approved the
market. These fees had the effect of reducing the sublarger of the two Qatari payments.
scription price to the Qatari investors to a price per
share that the Qatari negotiators insisted on. Other
Above, Doha skyline picture by AA
Φοβοῦ τοὺς Δαναοὺς καὶ
δῶρα φέροντας”
EXPERT WITNESS JOURNAL
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F E B R UA RY 2 0 2 5
