Login Register Subscribe
Current Issue

Ex-Barclays traders facing U.K. Libor charges can pursue U.S. fee case

Reprints

(Reuters) — Three former Barclays P.L.C. traders facing U.K. charges that they conspired to manipulate Libor may pursue a U.S. lawsuit seeking to force the bank to keep paying their legal fees, a federal judge ruled on Wednesday.

U.S. District Judge Lewis Kaplan in Manhattan rejected Barclays’ request to dismiss the lawsuit by Alex Pabon, Jay Merchant and Ryan Reich, who worked for the British-based bank in New York.

They said Barclays violated the whistleblower protections of the Dodd-Frank financial reform law when it decided in May 2014 to stop paying their fees in retaliation for their cooperation since 2009 in U.S. and U.K. probes into Libor manipulation.

That halt came a few days after the traders were criminally charged by the U.K. Serious Fraud Office with conspiring with each other and three former Barclays employees in London to fraudulently manipulate Libor, a benchmark used to set rates on credit cards, student loans and mortgages.

Barclays argued that it had no contractual obligation to pay the legal fees, and that too much time had elapsed since the alleged cooperation for its actions to be retaliatory.

Judge Kaplan, however, said it was premature to rule for the bank, and that the complaint suggested that Barclays “was complicit at high levels with any misconduct committed by the plaintiffs.”

He said a determination of Barclays’ obligations “should be made in light of all of the facts.”

Kerrie Cohen, a Barclays spokeswoman, declined to comment. Anne Vladeck, a lawyer for the traders, did not immediately respond to a request for comment.

Barclays agreed in June 2012 to pay roughly $453 million of fines in settlements with U.S. and U.K. regulators, and admitted to artificially depressing Libor submissions from August 2007 to January 2009.