Barclays Defeats Investors’ Appeal Over Reverse-Split Notes (2)

Barclays PLC prevailed Tuesday against investors seeking to revive their lawsuit alleging the bank sold unregistered exchange-traded notes and included misleading information in a registration statement in violation of securities laws.

The investors didn’t acquire the volatility-linked ETNs in a “sale” subject to certain securities law provisions, the US Court of Appeals for the Second Circuit said in a novel ruling. At issue was whether the noteholders gave up any value when their VXX ETNs underwent a 4:1 reverse split.

When Barclays exercised its right to split the ETNs, the investors didn’t “lose, or gain, anything: they simply traded in ...