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Barclays was again in the firing line with the UK’s Serious Fraud Office today as the SFO applied to the High Court to have its case against Barclays reinstated. Barclays was under investigation for fraud, following the bail out of the bank by Qatar during the Great Financial Crisis. Senior figures within Barclays remain under investigation, although the case was originally thrown out in May of this year.

Barclays share price hit by SFO investigation

At the time the case was thrown out, Barclays lawyers said they they expected the SFO to reinstate the charges with a new indictment against the bank expected in the near future. It seems unfair in a way, as without the Qatar bail out Barclays would have likely had to turn to the UK tax payer for a bail out, as other UK high street banks were forced to do. Much of the detail of the case

The Barclays share price had broken 192 earlier this month, but since then it has been trending down, going as low as almost 185 before rallying again. The news will not be warmly greeted by Barclays shareholders who had been hoping that the SFO investigation was now behind Barclays. Some investors were already getting out of Barclays stock this morning, with selling taking the Barclays share price down from around 190 to 188 by Wednesday lunch time.

There is obviously still a lot of optimism supporting the Barclays share price – investors value the brand for its global operations and its UK retail network, as well as ancillary services. Given that the bank has already been successful once in scotching an SFO foray, investors will be hoping that Barclays can pull off the same tick again.

Barclays can’t seem to catch a break at the moment – every time it turns around there is another investigation or law suit being launched against the bank. Back in March it was forced to pay $2 billion to settle a US investigation into the marketing of residential mortgage-backed securities between 2005-2007. The US investigation focused on 36 deals covering $31 billion in loans, of which approximately half defaulted.

Barclays also stumbled over its handling of a whistle blower case which has seen Jes Staley, its chief executive, forced to cough up over £1 million of his personal wealth as a result of trying to unmask a whistleblower.

The future for Barclays share price looks uncertain

Analysts and investors are becoming increasingly concerned about both the failure of Barclays to shrug off the various legal forays against its senior personnel, but also the underlying culture that has produced these investigations in the first place.

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Stuart Fieldhouse

Stuart Fieldhouse has spent over 20 years in journalism and financial communications, including six years as a wealth management correspondent for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong.

Stuart has worked as head of content at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Stuart continues to work with hedge funds, private banks, stock exchanges and other financial institutions on their communications, data and marketing requirements.

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