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 The 2nd U.S. Circuit Court of Appeals in New York said on Friday
that investors presented a "plausible claim" that a 12 percent drop
on June 28, 2012 in the price of their American depositary shares
stemmed from misrepresentations by Barclays and several officials,
including one-time Chief Executive Robert Diamond.
That decline came a day after Barclays agreed to pay roughly $453
million of fines in settlements with U.S. and British regulators,
and admitted to having often made artificially depressed Libor
submissions from August 2007 to January 2009.
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.
"We're obviously pleased with the decision and look forward to
prosecuting the case," said David Rosenfeld, a partner at Robbins
Geller Rudman & Dowd representing investors led by the Carpenters
Pension Trust Fund of St. Louis in Missouri and the St. Clair Shores
Police & Fire Retirement System in Michigan.
Barclays spokesman Brandon Ashcraft declined to comment. Andrew
Levander, a partner at the law firm Dechert who represents Diamond,
could not immediately be reached.
Investors claimed that Barclays' share price was propped up
artificially from July 2007 to June 2012 because the bank had
understated its borrowing costs through false Libor submissions from
August 2007 to January 2009.
They also said Diamond, then Barclays' president, deceived them on
an October 31, 2008 conference call when he denied that Barclays'
borrowing costs were higher than those of rivals, saying: "We're
categorically not paying higher rates in any currency."
UNDERSTATED COSTS
U.S. District Judge Shira Scheindlin in Manhattan dismissed the
lawsuit last May, saying any inflation in Barclays' share price
resulting from Libor manipulation had dissipated by the time the
settlement was disclosed.
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Writing for the 2nd Circuit, however, Judge Richard Berman, who
normally sits on the same court as Scheindlin, said the dismissal
was premature.
"Defendants argue that Barclays' Libor misrepresentations were
'stale,'" and that the share price drop resulted from the fines
rather than any inadequate disclosures, Berman said. "But
defendants' arguments here involve questions of fact and should not
be resolved upon a motion to dismiss."
The 2nd Circuit also said Scheindlin correctly ruled 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.
Royal Bank of Scotland Group Plc <RBS.L>, Switzerland's UBS AG <UBSN.VX>,
Britain's ICAP Plc <IAP.L> and Dutch bank Rabobank have also reached
regulatory accords over Libor manipulation. The Federal Deposit
Insurance Corp, bondholders and others have accused 16 banks in U.S.
lawsuits of Libor manipulation.
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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