Stay Away From Barclays, Problems Could Be Bigger Than Initially Thought

| About: Barclays PLC (BCS)
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Barclays (NYSE:BCS) is under pressure from regulators after news was announced that the company was improperly fixing LIBOR rates in order to increase profits.

Barclays has already agreed to pay $450 million to settle the charges against them. However, the settlement alone does not mean that Barclays is out of the woods. The scandal may just be unwinding.

In the last two days, both Barclays' CEO and Chairman have resigned. Chairman Marcus Agius resigned on Monday and CEO Bob Diamond resigned today.

While the settlement amount won't cripple Barclays, the fact that Barclays was falsely overstating its strength will. When the government begins to crack down on Barclays, the company's earnings may not be nearly as high as they previously were.

I think the fact that the both the CEO and Chairman resigned in such a short period of time shows us that the company may have trouble ahead. Its possible that criminal charges could follow since its possible that many executives knew of the rate manipulation.

CEO Bob Diamond is set to testify this week and regulators will be looking to grill him on this, largely because its possible that many of the senior executives knew about this.

Shares of Barclays are down more than 13% since the scandal was announced. Its possible that there could be plenty of more downside ahead. I believe this scandal is about to unearth many illegal activities that Barclays has done in the past.

With key executives departing the company in such a short period, Barclays' problems may be bigger than just a simple $450 million settlement. If criminal charges come, the stock could fall in a downward spiral. Investors should stay away from Barclays at this point.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.