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Former Barclays chief Jes Staley has failed to persuade a California court to throw out an investor lawsuit over his ties to Jeffrey Epstein, in the same week that he lost a separate UK court battle over his ties to the late sex offender.
Staley, Barclays and its chair Nigel Higgins had asked the California court to dismiss a claim by a group of investors in Barclays’ US securities, which alleges that they misrepresented Staley’s relationship with Epstein and therefore inflated the price of Barclays’ New York-traded American depositary receipts, which later fell.
A judge rejected that attempt this week, saying statements by the bank and by Staley on an earnings call were potentially misleading. It means the US class action case, which is being led by a New York City employees’ union and a St Louis firefighters’ retirement system, can go ahead, though the judge dismissed one count against the bank and one part of the claim that related only to Higgins declining to comment on Staley’s departure from the bank.
The bank declined to comment. Requests for comment made to Staley and Higgins via their lawyers were not immediately returned.
The California ruling said that in Barclays’ 2019 annual report and a 2020 press release, the bank said Staley “developed a professional relationship with Mr. Epstein”. This was “potentially misleading” because a “reasonable investor who read the board’s statements would not think that Staley and Epstein had a personal relationship”, it said.
The bank “contends that publications opined otherwise, so investors should not have been misled”, according to the ruling. Staley had asked the court to consider articles published in the Financial Times, the New York Times and the Financial Mail on Sunday about his ties to Epstein, which the court agreed to do.
This argument “misses the point”, district judge Maame Ewusi-Mensah Frimpong said, since the press release and annual report were a response to an article in the New York Times and the bank was trying “to set the record straight about Staley and Epstein’s relationship after doing their own due diligence.”
The decision caps a difficult week for Staley who on Thursday found out that his bid to overturn a lifetime ban from the UK’s Financial Conduct Authority had failed.
Throughout a month-long trial in London earlier this year, Staley sought to draw a fine line between a professional and personal relationship regarding his ties to Epstein; a distinction rejected by the Upper Tribunal that heard his legal challenge.
The class-action lawsuit undermines Barclays’ attempts to draw a line under the Epstein saga, which has hung over the bank for almost six years. Higgins testified during the UK trial in March as the judge tried to determine whether the bank had had a full picture of Staley’s relationship with Epstein.
Staley claimed he had been transparent with both Higgins and Bob Hoyt, group general counsel at the time, about his ties to Epstein through various conversations with the two men and other senior executives at Barclays. However, Higgins said during his evidence that he now had “a different picture” of Staley and Epstein’s relationship based on the new information now available to him.
