Barclays and its former chief executive Jes Staley are facing a class action lawsuit in the US over claims they defrauded and misled investors over Staley’s relationship with the child sex offenderJeffrey Epstein.
A judge in a Los Angeles court denied Staley’s request to dismiss the case this week, paving the way for a fresh hearing that continues a long-running legal saga emanating from Staley’s statements to regulators and investors over the nature of histies to the disgraced financier.
It is a bruising outcome for the American banker, wholost a legal challengein the UK on Thursday against the Financial Conduct Authority (FCA), which in 2023 had banned him for life from holding senior management roles in the City for misleading the watchdog over his history with Epstein.
The US class action suit, led by pension funds in New York and Missouri, alleges thatBarclays, its chair, Nigel Higgins, and Staley repeatedly misrepresented Staley’s history with Epstein to media and investors, starting in July 2019, weeks after Epstein was arrested on charges of trafficking underage girls for sex.
Court documents allege that this was done in an attempt to protect Barclays’ reputation and share price. The plaintiffs claim Barclays downplayed the relationship even after the FCA launched its investigation, which centred on claims made in a letter it received from Barclays in October 2019.
That letter claimed that Staley “did not have a close relationship” with Epstein and that his last contact with the financier had been “well before” he joined Barclays four years earlier in 2015. The FCA investigation, triggered by a cache of 1,200 emails from Staley’s former employer JP Morgan, concluded that the pair were“indeed close”and had a relationship that “went beyond one that was professional in nature”.
The US lawsuit claims Barclays, Staley and Higgins misled them even after learning about the FCA investigation. They claim that this continued even after Barclays reviewed the JP Morgan email cache, which “demonstrated that the two men shared a much closer, personal relationship than defendants acknowledged to the FCA and the public”.
The case has been brought by US shareholders and owners of American depository receipts (ADRs), which give investors the chance to own and trade shares in foreign companies on US stock exchanges.
They claim they were ultimately defrauded, having learned about the true nature of Staley and Epstein’s relationship only after the FCA publicly released findings of its investigation and banned Staley from the Cityin October 2023. The news caused the value of their shares and ADRs to drop, resulting in “significant economic losses”.
Staley hadresigned from Barclays two years earlier, in 2021, over preliminary findings from the FCA’s investigation.
“When the FCA privately informed defendants of the outcome of its preliminary investigation, Staley left Barclays. Nevertheless, Barclays publicly continued to minimise the scope of the FCA’s investigation into Staley’s relationship with Epstein and voiced its support for its former CEO,” court filings by the plaintiffs state.
That continued, they allege, after damaging details were revealed in a civil suit against JP Morgan, which was accused of banking Epstein while he was sex trafficking women and girls. While the cases were eventually settled, the class action says the evidence presented “further exposed correspondence between Staley and Epstein that publicly revealed their relationship was more than merely professional – contrary to the assurances defendants made to investors in Barclays securities”.
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The filings cite an infamous exchange in which the pair refer to Disney princesses in July 2010. “That was fun. Say hi to Snow White,” Staley wrote. “What character would you like next?” Epstein asked, to which Staley replied: “Beauty and the Beast.”
The filing states: “When defendants’ deception of the FCA and investors was revealed, the price of Barclays securities again fell, and investors were further economically damaged.”
The plaintiffs are suing Barclays, Higgins and Staley for an unspecified amount, saying they want compensation for “all damages sustained as a result of defendants’ wrongdoing, in an amount to be proven at trial, including interest”. They are also requesting that costs and expenses linked to the trial be covered, on top of “such other relief as the court may deem just and proper”.
The first scheduling hearing in this US class action case, which will start setting out a timetable and deadlines for the legal process, is due to take place on 14 August.
A legal representative for Staley declined to comment. Barclays and Higgins declined to comment.