Barclays Must Face Shareholder Lawsuit Over Libor Manipulation

The 2nd U.S. Circuit Court of Appeals in New York says that Barclays Plc (BARC) shareholders can go ahead with their securities lawsuit claiming that the British bank caused them to suffer financial losses over manipulation of Libor. The ruling reverses a lower court’s decision.

The London Interbank Offered Rate is used to set interest rates on mortgages, credit cards, and student loans. It is also the average interest rate that banks can use to estimate what they would be charged if they borrowed from other banks. Regulators in Europe and the US have been investigating whether banks manipulated Libor when the 2008 financial crisis was happening.

In 2012, Barclays consented to pay British and American regulators $453 million and admitted that between August 2007 and January 2009 it frequently made Libor submissions that were artificially depressed. (Other big financial institutions that have settled Libor manipulation allegations included UBS AG (UBS), ICAP Plc (IAB), Rabobank, and Royal Bank of Scotland Group (RBS)).

In their Libor manipulation case, these investors, led by the St. Clair Shores Police & Fire Retirement System in Michigan and the Carpenters Pension Trust Fund of St. Louis in Missouri, believe that between July 2007 and June 2012 share prices in Barclays were artificially inflated as a result of false Libor submissions and because the bank understated borrowing costs. They also contend that ex-CEO Robert Diamond lied to them during a 2008 conference call when he denied that the bank’s borrowing coasts were higher than competitors.

A judge in Manhattan tossed out the case last year, noting that Judge share price inflation caused by Libor manipulation had gone down by the time the settlement was reached. Now, however, the Second Circuit is saying that investors put together a “plausible claim” that the drop in American depositary shares of 12% on June 28, 2012 was a result of misrepresentations made by Barclays and its officials.

The SSEK Partners Group is here to help institutional investor get back losses they suffered because of negligence or wrongdoing by a financial institution or one of its representatives. Contact our institutional investor fraud lawyers today.

The Libor Investigation, The Wall Street Journal

Barclays Investors’ Rate-Rigging Suit Revived on Appeal, Bloomberg, April 25, 2014

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