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Barclays must face U.S. lawsuit over Libor

Published 25/04/2014, 15:45
BARC
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By Jonathan Stempel

NEW YORK (Reuters) - A U.S. appeals court has revived a lawsuit against Barclays Plc L:BARC by shareholders who claimed to lose money because the British bank manipulated the interest rate known as Libor.

The second U.S. Circuit Court of Appeals in New York said a lower court judge erred in dismissing the case against Barclays and several former officials, including one-time Chief Executive Robert Diamond, because investors presented a "plausible claim" that a June 2012 drop in the price of their American depositary shares resulted from Barclays' misrepresentations.

The court also said the lower court judge, U.S. District Judge Shira Scheindlin in Manhattan, correctly concluded that Barclays' statements in U.S. Securities and Exchange Commission filings about its internal controls were not materially false. It returned the case to her court for further proceedings.

Barclays spokesman Brandon Ashcraft declined to comment. A lawyer for Diamond could not immediately be reached. Susan Alexander, a lawyer for the investors, did not immediately respond to requests for comment.

Investors accuse Barclays of securities fraud for having understated its borrowing costs from August 2007 to January 2009 by submitting false information to calculate Libor, or the London Interbank Offered Rate.

The manipulation was revealed in June 2012 when Barclays reached $453 million (269 million pounds) of settlements with U.S. and British regulators.

The lawsuit sought class action status on behalf of ADS purchasers from July 2007 to June 2012.

Plaintiffs include the Carpenters Pension Trust Fund of St. Louis in Missouri, the St. Clair Shores Police & Fire Retirement System in Michigan and the Pompano Beach Police & Firefighters' Retirement System in Florida.

Libor underpins hundreds of trillions of dollars of transactions, and is used to set interest rates on credit cards, student loans and mortgages. U.S. and European regulators have been probing whether banks artificially depressed Libor during the 2008 financial crisis to appear healthier.

The case is Carpenters Pension Trust Fund of St. Louis et al v. Barclays Plc et al, 2nd U.S. Circuit Court of Appeals, No. 13-2678.

(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky)

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