Barclays settles with U.S. investors over Libor manipulation

By Jonathan Stempel

NEW YORK (Reuters) - Barclays Plc (BARC.L) has agreed to pay $14 million (£9.2 million) to settle litigation by holders of its American depositary shares that it conspired with rivals to rig the Libor benchmark interest rate, causing its share price to be inflated.

The preliminary accord filed in Manhattan federal court on Tuesday evening resolves claims that Barclays "turned a blind eye" before and after the financial crisis when its traders manipulated Libor to boost profits, and that senior management condoned the deception to enhance Barclays' reputation in the marketplace.

Barclays denied wrongdoing in agreeing to settle with plaintiffs led by the Carpenters Pension Trust Fund of St. Louis and the St. Clair Shores Police & Fire Retirement System in Michigan. The class period runs from July 2007 to June 2012, and the settlement requires court approval.

A bank spokesman, Mark Lane, declined to comment.

Libor, or the London Interbank Offered Rate, is used to set rates on hundreds of trillions of dollars of transactions, including for credit cards, student loans and mortgages. Banks use it determine the cost of borrowing from one another.

Tuesday's settlement was disclosed 11 days after Barclays agreed to pay $120 million to resolve similar manipulation claims by "over-the-counter" investors that transacted directly with banks comprising a panel to determine Libor.

Barclays also reached $453 million of settlements over Libor in June 2012 with U.S. and British regulators, and agreed last month to pay $94 million to end litigation claiming it conspired to rig Euribor, which is Libor's euro-denominated equivalent.

The bank's ADS price fell 12 percent on the day after the regulatory settlements were announced. Regulators and investors have accused many other major banks of conspiring to rig Libor.

Law firms for the shareholders, led by Robbins Geller Rudman & Dowd, plan to seek fees of up to 30 percent of the settlement fund, plus up to $1.2 million for costs, court papers show.

The case is Gusinsky et al v. Barclays Plc et al, U.S. District Court, Southern District of New York, No. 12-05329.

(Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)