BARCLAYS has been ordered to pay a former client €10 million after losing a court case over claims that it misused confidential information gleaned from a customer to buy a Swedish carbon trading business four years ago.
The bank will have to pay the sum in damages to CF Partners, a financial advisory firm, over its £98 million takeover of Tricorona, a Stockholm-based hydropower carbon credits trader, in 2010, a deal that involved the use of confidential documents handed to it as part of an aborted acquisition two years earlier.
In his judgment in the High Court, Mr Justice Hildyard found that Barclays had breached its duty of confidentiality to CF Partners and had “misused” the documents with a view to completing what he said was the bank’s “urgent agenda to acquire large ‘elephant deal’ portfolios”.
The loss of the case comes in the same week that Barclays was fined a total of £47 million by British and American regulators after it was found to have improperly safeguarded customer funds in the UK and separately was accused by US authorities of lax compliance procedures following its purchase of Lehman Brothers’ American operations in 2008.
“This is another really bad decision against Barclays,” Philip Rubens, a financial services solicitor at Cooke, Young & Keidan, said. “The role of several Barclays employees as set out in the lengthy judgment will be scrutinised over the coming weeks.”
CF Partners’ claim concerned discussions between the company and Barclays in September 2008, when it approached the bank to provide it with debt financing to buy Tricorona. CF Partners provided Barclays with confidential information on Tricorona’s business to explain how it would make money from the deal, which was pulled two months later.
In 2010, Barclays made its own bid for Tricorona helped by the information gathered by CF Partners and made a $98 million offer to buy an 85 per cent stake in the business in June of that year.
CF Partners complained to Bob Diamond, then chief executive of Barclays, when it became aware of the bank’s bid, but it was rebuffed.
CF Partners then sent Barclays an invoice in August 2010 for €96.8 million, for what it said was an “industry-standard fee for the sale of a portfolio”. The firm subsequently launched a legal action against the bank.
The Times
