Barclays' LIBOR Case Dismissed - Analyst Blog
) won the dismissal of the U.S. lawsuit filed against it by the
stockholders. The shareholders accused Barclays of indulging in
activities which resulted in loss of money for them.
As per the U.S. District Judge, shareholders of Barclays' American depositary shares failed to provide evidence that the British bank misguided them about London Interbank Offered Rate (LIBOR). LIBOR supports transaction worth trillions of dollars which are used to fix interest rates on credit cards, student loans and mortgages. The investors failed to prove that the bank did not disclose the potential liabilities.
Moreover, the judge pointed out that the stockholders were unable to provide evidence related to alleged LIBOR manipulation by Barclays between Aug 2007 and Jan 2009 which caused investors to lose money through Jun 2012.
The lawsuit was filed by a group on behalf of American Depositary Shares (ADS) purchasers. These ADS were bought between Jul 2007 and Jun 2012. Further, the case was persuaded by the St. Clair Shores Police & Fire Retirement System in Michigan and the Carpenters Pension Trust Fund of St. Louis in Missouri.
The judge said that the prosecutor is barred from amending the lawsuit since they failed to acknowledge the earlier deficiencies identified in the second complaint amended by them.
However, a probe is currently in progress by the U.S. and European regulators so as to check whether the banks devalued LIBOR during the financial crisis to emerge healthier.
Barclays was the first bank which settled with the authorities over alleged LIBOR manipulation. The bank reached a settlement of $453 million with the U.S. and European regulators in Jun 2012.
Recently, in Feb 2013, The Royal Bank of Scotland Group plc ( RBS ) conceded to pay a penalty of $612 million to the Financial Services Authority, Commodity Futures Trading Commission and Department of Justice to resolve charges against the bank for its involvement in the manipulation of LIBOR.
In Dec 2012, UBS AG ( UBS ) also agreed to pay a penalty of $1.5 billion to the U.S., U.K. and Swiss authorities to resolve charges against the bank for its involvement in the manipulation of LIBOR.
This lawsuit related to Barclays is not a part of the U.S. litigation filed by shareholders and others in relation to LIBOR manipulation against 16 banks that included among others Bank of America Corporation ( BAC ), Citigroup, Inc., Credit Suisse Group AG, Deutsche Bank AG, HSBC Holdings plc, and JPMorgan Chase & Co.
The favorable ruling comes as a resounding victory for Barclays. Further, the dismissal of the LIBOR lawsuit is expected to stem to some extent the spiraling expenses at Barclays related to litigation.
Barclays currently carries a Zacks Rank #3 (Hold).
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