Class action filed against Barclays
NEW YORK (Legal Newsline) - A class action lawsuit was filed Tuesday in the New York federal court for customers who bought American Depository Receipts of Barclay, two subsidiaries and the company's former chairman and chief executive.
The suit alleges securities fraud in the LIBOR (London Inter-Bank Offered Rate) scandal.
Barclays has been fined a record $200 million by the Commodity Futures Trading Commission for allegedly attempting interest rate manipulation and false reporting to benefit its derivatives trading positions. The New York firm of Wolf, Haldenstein, Adler, Freeman, & Herz represent the plaintiffs.
According to the complaint, Barclays "admittedly participated in an illegal scheme to manipulate the Libor interest rates for the benefit of Barclays' traders and to make Barclays appear financially healthier than it was during the Class Period."
The complaint also alleges that Barclays "lied to the company's shareholders about the company's purported compliance with their principles and operational risk management processes and repeatedly told shareholders that Barclays was a model corporate citizen even though at all relevant times it was flouting the law."
The complaint states, "the London Inter-Bank Offered Rate ("Libor") is a tool to measure risk within the banking system as a whole and it may be more surgically applied to test a particular bank's creditworthiness. When a bank lends to a customer (in this case another bank), it fixes the interest rate and other terms premised on an assessment of the borrower's ability to repay the loan.
"The greater the risk, the higher the rate the bank will charge to assume the risk. The opposite is true: the lower the credit risk, the lower the rate the bank will charge to take on the risk."
Last week, the New York City law firm of Hagens and Berman also filed a class action suit against Barclays in the same court. It accused Barclays, as well as Citigroup, Deutsche Bank, JP Morgan Chase, HSBC Holdings, Cooperative Centrale Raiffeisen-Boerenleen bank, BA, USS, A.G., and USB (Luxembourg) S.A of violations of the Sherman Act and violations of the Commodities Exchange Act, among other things. The plaintiff seeks compensatory and recessionary damages for the class. Barclays must also pay a $160 million criminal fine to the Justice Department.
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