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Barclays faces investment lawsuit Barclays faces investment lawsuit
(about 3 hours later)
Barclays says the French firm's lawsuit has no merit
Barclays is being sued in a New York court over claims it moved loss-making investments from its own accounts to those held by outside investors.Barclays is being sued in a New York court over claims it moved loss-making investments from its own accounts to those held by outside investors.
ODDO Asset Management of France alleges the losses amount to $600m. The losses to investors are alleged to total hundreds of millions of dollars.
The French company claims it was told these investments - known as "SIV-lites" - were super-safe and offered a AAA or AA rating. The case is being brought by a French company which claims it was told these investments - known as "SIV-lites" - were super-safe and offered a AAA or AA rating.
But Barclays denies the allegations and told BBC File On 4, that the action has "no merit."But Barclays denies the allegations and told BBC File On 4, that the action has "no merit."
ODDO's case against Barclays centres on two complex investments - one called Golden Key and the other called Mainsail - which the bank created to sell to outside investors including ODDO. The case against Barclays centres on two complex investments - one called Golden Key and the other called Mainsail - which the bank created to sell to outside investors.
Find out more Listen to File On 4, Radio 4 Tuesday 14 October 2008 2000 BST, repeated Sunday 19 October 1700 BSTOr catch up at Radio 4's Listen Again siteFind out more Listen to File On 4, Radio 4 Tuesday 14 October 2008 2000 BST, repeated Sunday 19 October 1700 BSTOr catch up at Radio 4's Listen Again site
The company alleges that in the summer of 2007, at a time when the sub-prime crisis was growing, Barclays arranged for hundreds of millions of dollars worth of mortgage-based securities to be transferred from its own accounts to the two SIV-lites.The company alleges that in the summer of 2007, at a time when the sub-prime crisis was growing, Barclays arranged for hundreds of millions of dollars worth of mortgage-based securities to be transferred from its own accounts to the two SIV-lites.
ODDO's lawyer Geoffrey C Jarvis said that most people in the investment world knew in June 2007 that such mortgage-based investments were "substantially impaired." The French company's US lawyer Geoffrey C Jarvis said that Barclays should have known in June 2007 that such mortgage-based investments were "substantially impaired."
He added: "I can't say what Barclays knew because they haven't told me but if they didn't know they were certainly reckless in not knowing."He added: "I can't say what Barclays knew because they haven't told me but if they didn't know they were certainly reckless in not knowing."
Barclays refused to discuss the case with the BBC but in a short statement said: "This action has no merit and we will contest it vigorously."Barclays refused to discuss the case with the BBC but in a short statement said: "This action has no merit and we will contest it vigorously."