* Investors in $2.5 billion offering may pursue claims
* Barclays was accused of hiding credit market risks
By Jonathan Stempel
NEW YORK, Aug 19 (Reuters) - A U.S. appeals court on Mondaysaid investors may revive a lawsuit accusing Britain's BarclaysPlc of misleading them in a 2008 stock offering aboutits subprime mortgage exposure and ability to manage creditrisks.
Reversing a lower court, the 2nd U.S. Circuit Court ofAppeals in New York said investors may sue Barclays and itsunderwriters over a $2.5 billion offering of American depositaryshares in April 2008 that lost much of its value within a year.
The lawsuit is one of many accusing major banks of inflatingtheir share prices by concealing or being too slow to reportdeteriorating credit conditions on their balance sheets.
Barclays' offering came just four months before theLondon-based bank took a 2.8 billion pound ($4.4 billion)writedown on subprime mortgages and other risky debt. Soon afterthe writedown, it announced a large capital-raising plan.
"In a quickly deteriorating credit market, we believe theparticulars about a firm's exposure to that market could assumea level of importance, and hence materiality, that may not havebeen the case in less economically stressful times," CircuitJudge Barrington Parker wrote for a two-judge 2nd Circuit panel.
However, the panel upheld the dismissal of claims over threeofferings totaling $2.95 billion between April 2006 and November2007, saying the plaintiffs missed a one-year deadline to sue.
U.S. District Judge Paul Crotty in Manhattan had dismissedall of the plaintiffs' lawsuit in January 2011. Monday'sdecision sends the case back to his courtroom.
Barclays spokesman Brandon Ashcraft declined to comment.
Darren Robbins, a partner at Robbins Geller Rudman & Dowdrepresenting the plaintiffs, said he is pleased with thedecision, and looks forward to pursuing the case over the 2008offering.
Investors had sought class-action status on behalf ofpurchasers of 218 million Callable Dollar Preference Shares ofBarclays Bank Plc. These were originally priced at $25 each, buttheir value plunged to between $5 and $7 by March 2009.
"OBJECTIVELY FALSE" STANDARD
The plaintiffs accused Barclays of failing to disclose inoffering materials roughly 36 billion pounds ($56.3 billion) ofcredit exposure, and misleading them that the bank's riskmanagement would prevent big losses. They said this violatedSections 11 and 12(a)(2) of the Securities Act of 1933.
Parker said that under the 2nd Circuit decision in Fait v.Regions Financial Corp, which was decided in 2011 after Crotty'sruling, a defendant may be liable under the 1933 Act for amisstatement of belief or opinion that was "objectively falseand disbelieved by the defendant" when made.
Based on that decision, Parker said "the district courterred in stating that claims of disbelief of subjective opinionsmust necessarily be brought as fraud claims," which require adifferent burden of proof.
This didn't apply to the earlier offerings, however, becauseBarclays had by February 2008 made "corrective" disclosures thatstarted the one-year period to bring a lawsuit, Parker wrote.
By waiting until March 2009 to sue, the investors waited toolong, he concluded.
The case is Freidus et al v. Barclays Bank Plc et al, 2ndU.S. Circuit Court of Appeals, No. 11-2665.
Barclays (BARC)
