Barclays Loses Appeal Ruling in FSA Probe of Miner’s Share Fraud
Stock Chart for Barclays PLC (BARC)
Barclays Plc (BARC) failed to convince a London court to hold Britain’s financial regulator liable for losses suffered when a gold mining company accused of fraud had its assets at the bank frozen.
Judges at the U.K.’s Court of Appeal today refused to grant an order saying the Financial Services Authority should pay for all losses resulting from an injunction freezing the Barclays accounts of Sinaloa Gold Plc. (S6G)
The U.K.’s second-largest bank had argued the FSA should pay for all costs resulting from its enforcement actions, not just the expense of finding and freezing the assets. Judge Nicholas Patten disagreed, saying in a written verdict this type of order would be “a kind of blank cheque.”
The FSA is investigating Sinaloa, which explores for gold in Mexico, and trading company PH Capital Invest over the alleged sale of “worthless” shares in a boiler-room fraud, according to the appeal court judgment.
In Dec. 2010, the FSA won an order prohibiting the sale of Sinaloa stock and freezing assets with a value of up to 858,267 pounds ($1.3 million).
The FSA and Barclays didn’t immediately respond to requests for comment.
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