According to the law firm press release, 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.
The Complaint alleges that Defendants did not act fairly, transparently, and try in good faith to fix Libor rates at levels that accurately reflected the inherent and actual risk in the market place. Defendants, instead, 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 further alleges that apart from participating in an illegal scheme to manipulate Libor rates in a way that would allow Defendants and other bankers to exploit borrowers and make even more money, the Defendants made material misstatements 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.
On June 27, 2012, Barclays was found by US and UK regulators to have manipulated or “fixed” its Libor rate submissions. Barclays’ top management essentially admitted to the Bank’s malfeasance. In an open letter to the chairman of the Treasury Select Committee, Defendant explained that the authorities had highlighted two issues: First, a number of individual traders had attempted to influence the bank’s interest rate submissions in order to boost their own trading desk’s profits - operating purely for their own benefit; Defendant said this conduct was wholly inappropriate. Second, during the recent credit crisis, Barclays reduced its Libor submissions to protect the reputation of the bank from negative speculation, which arose as a result of Barclays’ higher rate submissions in comparison to other banks – i.e. the bank wanted to make itself look financially stronger relative to other banks in order to keep its borrowing costs down and market reputation up.
These revelations caused the Company’s ADRs initially to fall by 12%, from $12.33 per share to $10.84 per share on over 22 million shares traded and then an additional 5% on over 14 million shares traded.
October 1, 2012, an order appointing lead plaintiff and lead counsel was issued by the Court.
On December 18, 2012, the lead plaintiffs filed an Amended Complaint for Violation of the Federal Securities Laws against the defendants.
On May 13, 2013, an Opinion and Order was issued by the Court granting the Defendants' Motion to Dismiss. Subsequently, the Clerk of the Court was ordered to close this motion and this case.
On June 12, 2013, the Court denied the plaintiffs' motion for reconsideration and directed the clerk of the court to close the case.
On July 15, 2014, the United States Court of Appeals for the Second Circuit issued a Mandate affirming in part and vacating in part the decision of the district court. This case was remanded for further proceedings.
On October 20, 2014, the Court issued an Order denying the Defendants' motion to dismiss.