A U.S appeals court on Monday said investors may revive a lawsuit accusing Britain's Barclays of misleading them in a 2008 stock offering about its subprime mortgage exposure and ability to manage credit risks.
Reuters News reports that reversing a lower court, the 2nd U.S. Circuit Court of Appeals in New York said investors may sue Barclays and its underwriters over a $2.5bn offering of American depositary shares in April 2008 that lost much of its value within a year.
The lawsuit is one of many accusing major banks of inflating their share prices by concealing or being too slow to report deteriorating credit conditions on their balance sheets.
Barclays' offering came just four months before the London-based bank took a $4.4bn writedown on subprime mortgages and other risky debt. Soon after the writedown, it announced a large capital-raising plan.
However, the panel upheld the dismissal of claims over three offerings totaling $2.95bn between April 2006 and November 2007, saying the plaintiffs missed a one-year deadline to sue.
U.S. District Judge Paul Crotty in Manhattan had dismissed all of the plaintiffs' lawsuit in January 2011. Monday's decision sends the case back to his courtroom.
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image: © Ricardo Ricote Rodríguez