(Adds comment from plaintiff's lawyer, litigation against otherbanks, Deutsche Bank lawsuit and comment)
By Jonathan Stempel
NEW YORK, Feb 18 (Reuters) - Barclays Plc agreed topay $50 million to settle a U.S. lawsuit claiming it rigged itsforeign exchange trading system to reject client orders thatwould be unprofitable for the British bank.
The preliminary, all-cash settlement with investors led byAxiom Investment Advisors LLC was disclosed in papers filed onWednesday night in the U.S. District Court in Manhattan, andrequires a judge's approval.
It comes three months after Barclays agreed to pay $150million and fire a senior electronic trading official to resolvesimilar claims by the New York State Department of FinancialServices.
Barclays denied wrongdoing and agreed to provide informationthat may help Axiom pursue similar cases against other banks.
Mark Lane, a Barclays spokesman, declined to comment.
The lawsuit arose from "Last Look," a Barclays tradingsystem feature meant to deter traders from exploiting tinydelays, often just a few milliseconds, in the flow ofinformation within the marketplace.
Instead, according to the New York regulator, Barclays usedLast Look as a "general filter" to weed out unprofitable trades,and gave vague or inaccurate responses to clients who asked whytheir trades were not being processed.
Axiom, which is based in Manhattan, said this caused"significant damages" for Barclays' foreign exchangecounterparties, and amounted to breach of contract or fraud.
In September and October 2014, Barclays revised Last Look sothat it would reject trades deemed "sufficiently unprofitable"for both customers and the bank, not just the bank, the New Yorkregulator has said.
Barclays is among several banks that in 2015 settled privateU.S. litigation over alleged currency rigging.Claims over Last Look were not covered in its settlement.
George Zelcs, a lawyer for Axiom, called the latest Barclaysaccord "a meaningful initial settlement that hopefully allows usto move forward in other cases," including a lawsuit againstDeutsche Bank over a similar algorithm.
A Deutsche Bank spokeswoman declined to comment.
The case is Axiom Investment Advisors LLC v. Barclays BankPlc, U.S. District Court, Southern District of New York, No.15-09323. The Deutsche Bank case is Axiom Investment AdvisorsLLC v. Deutsche Bank AG in the same court, No. 15-09945. (Editing by Bernadette Baum)