Barclays 2014 Annual Report Download - page 315

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29 Legal, competition and regulatory matters continued
Background Information
The consolidated amended complaint, filed in February 2010, asserted claims under the Securities Act of 1933, alleging that registration
statements relating to American Depositary Shares representing preferred stock, series 2, 3, 4 and 5 (Preferred Stock ADS) offered by BBPLC at
various times between 2006 and 2008 contained misstatements and omissions concerning (amongst other things) BBPLC’s portfolio of
mortgage-related (including US subprime-related) securities, BBPLC’s exposure to mortgage and credit market risk, and BBPLC’s financial
condition. These complaints did not specifically identify what alleged damages these plaintiffs sought to recover in connection with their claims.
Recent Developments
The claims concerning the series 2, 3 and 4 offerings have been dismissed on the basis that they were time barred. Although the SDNY also
dismissed the claims concerning the series 5 offering, the Second Circuit reversed the dismissal and ruled that the plaintiffs should have been
permitted to file a second amended complaint in relation to the series 5 offering claims. This series 5 offering had an original face amount of
approximately $2.5 billion.
In June 2014, the SDNY denied defendants’ motion to dismiss with respect to the claims in the amended complaint concerning the series 5
offering. The case is now in discovery.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the financial impact of the actions described on the Group or what effect, if any, that they
might have upon the Group’s operating results, cash flows or financial position in any particular period.
BDC Finance L.L.C.
BDC Finance L.L.C. (BDC) filed a complaint against BBPLC in the NY Supreme Court alleging breach of a portfolio of total return swaps governed
by an ISDA Master Agreement (collectively, the Agreement). A ruling was made against BBPLC, but the New York State Court of Appeals effectively
reversed that ruling. Parties related to BDC have also sued BBPLC and BCI in Connecticut State Court in connection with BBPLC’s conduct relating
to the Agreement.
Background Information
In October 2008, BDC filed a complaint in the NY Supreme Court alleging that BBPLC breached the Agreement when it failed to transfer
approximately $40m of alleged excess collateral in response to BDC’s October 2008 demand (Demand).
BDC asserts that under the Agreement BBPLC was not entitled to dispute the Demand before transferring the alleged excess collateral and that
even if the Agreement entitled BBPLC to dispute the Demand before making the transfer, BBPLC failed to dispute the Demand.
BDC demands damages totalling $298m plus attorneys’ fees, expenses, and prejudgement interest.
In August 2012, the NY Supreme Court granted partial summary judgement for BBPLC, ruling that BBPLC was entitled to dispute the Demand
before transferring the alleged excess collateral, but determining that a trial was required to determine whether BBPLC actually did so. The parties
cross-appealed to the Appellate Division of the NY Supreme Court (NY Appellate Division).
In September 2011, BDC’s investment advisor, BDCM Fund Adviser, L.L.C. and its parent company, Black Diamond Capital Holdings, L.L.C. also
sued BBPLC and BCI in Connecticut State Court for unspecified damages allegedly resulting from BBPLC’s conduct relating to the Agreement,
asserting claims for violation of the Connecticut Unfair Trade Practices Act and tortious interference with business and prospective business
relations. The parties have agreed to a stay of that case.
In October 2013, the NY Appellate Division reversed the NY Supreme Court’s grant of partial summary judgement in favour of BBPLC, and instead
granted BDC’s motion for partial summary judgement, holding that BBPLC breached the Agreement. The NY Appellate Division did not rule on the
amount of BDC’s damages, which has not yet been determined by the NY Supreme Court.
Recent Developments
In January 2014 the NY Appellate Division granted BBPLC leave to appeal its October 2013 decision to the NY Court of Appeals. The New York
Court of Appeals heard oral argument on 6 January 2015 and on 19 February 2015 modified the NY Appellate Division’s grant of partial summary
judgement to BDC, holding that summary judgement in either party’s favour cannot be granted because a material issue of fact remains as to
whether BBPLC breached the Agreement. The New York Court of Appeals ordered that the matter be referred back to the NY Supreme Court for
further proceedings.
Claimed Amounts/Financial Impact
BDC has made claims against the Group totalling $298m plus attorneys’ fees, expenses and pre-judgement interest. This amount does not
necessarily reflect the Group’s potential financial exposure if a ruling were to be made against it.
Civil Actions in respect of the US Anti-Terrorism Act
In November 2014, a civil complaint was filed in the US Federal Court in the Eastern District of New York by a group of approximately 200 plaintiffs,
alleging that the Group and a number of other banks engaged in a conspiracy and violated the US Anti-Terrorism Act (ATA) by facilitating US
dollar denominated transactions for the Government of Iran and various Iranian banks, which in turn funded Hezbollah attacks that injured the
plaintiffs’ family members. Plaintiffs seek to recover for pain, suffering and mental anguish pursuant to the provisions of the ATA, which allows for
the tripling of any proven damages.
Claimed Amounts/Financial Impact
It is not currently practicable to provide an estimate of the financial impact of the matters in this section or what effect, if any, that these matters
might have upon operating results, cash flows or the Group’s financial position in any particular period.
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