Barclays Plc won dismissal of a lawsuit brought by U.S. investors seeking to recover losses from the British bank's alleged failure to disclose and properly account for its real estate exposure.  Federal Judge Paul Crotty in Manhattan found the plaintiffs failed to prove that Barclays didn't truly believe it was properly valuing its subprime and other real estate assets, and Barclays further offered "substantial risk disclosures" regarding its valuations to investors who bought its securities. 

[C-I Note:  Carfully note that, in ruling for the Defendant, the judge termed Barclays's risk disclosures as "substantial."   We know all-too-well that "disclosure" is typically the "Achilles Heal" of banks and brokerages in lawsuits and regulatory investigations.  Kudos to Barclays.]

The judge also dismissed dozens of additional defendants, including:  Barclays directors, current CEO Robert Diamond and predecessor CEO John Varley, more than a dozen underwriters - BofA, Citi, Goldman, RBC, UBS. 

The lawsuit is one of many by investors to accuse major banks of inflating their share prices by hiding or being too slow to report credit deterioration on their balance sheets.  It was brought by investors who said they bought some of the $5.45 billion of ADR shares that Barclays issued between 2006 and 2008 - shares that apparently lost between 73% and 78% of their value by the time the lawsuit began in March 2009, and that Barclays should compensate them for losses they suffered.

    Specific Allegations vs. Barclays.  Investors accused Barclays of failing to disclose in materials accompanying the ADR share offerings its $56 billion of credit exposure, including to subprime mortgages and CDO''s.  They alleged that Barclays' disclosures remained inadequate until the bank took a $4.3 billion writedown on subprime mortgages and other risky debt in August 2008.

But Judge Crotty ruled that plaintiffs failed to show how Barclays violated accounting and regulatory reporting rules or misled them about its risk management practices, and waited too long to bring some of their claims.  The case:  Barclays Bank Plc Securities Litigation, U.S. District Court, Southern District of New York, No. 09-01989.    [Reuters, 1/5]