Feb. 11 (Bloomberg) -- Barclays Plc, the U.K.’s third- biggest bank by assets, dropped its suit against Bear Stearns Cos. over losses caused by the 2007 implosion of a hedge fund that invested in subprime mortgages.

Barclays submitted a notice yesterday to dismiss the suit without the ability to renew it, according to the docket. Barclays spokesman Peter Truell declined to comment.

Barclays Bank Plc, a unit of London-based Barclays, claimed New York-based Bear Stearns’s asset management unit hid negative financial information about the collapsed fund, according to a complaint filed December 2007 in federal court in Manhattan. Barclays said it was the “sole participating shareholder” of the fund.

Bear Stearns Asset Management is now owned by New York- based JPMorgan Chase & Co. Mary Sedarat, a JPMorgan spokeswoman, said the case was dismissed and declined to comment further.

The collapse was “one of the most high-profile and shocking hedge fund failures in the last decade,” Barclays said in its complaint, which included claims of fraud, conspiracy and breach of fiduciary duty, and sought unspecified damages.

Ralph Cioffi, manager of the fund, has since been charged by federal prosecutors with fraud and conspiracy. Cioffi and Matthew Tannin, a senior managing director at Bear Stearns Asset Management, are scheduled to be tried in September. Both pleaded not guilty.

Cioffi Sued

Barclays also sued Cioffi and Tannin. It dropped the case against all defendants. Nina Beattie, a lawyer for Tannin at Brune & Richard LLP in New York, declined to comment. Edward Little, a lawyer for Cioffi at Hughes Hubbard & Reed LLP in New York, didn’t return a call seeking comment.

According to Barclays, Bear Stearns Asset Management had “long known” that the fund, the High-Grade Structured Credit Strategies Enhanced Leverage Master Fund, and its underlying assets were worth “far less” than their stated values and were at “great risk for further losses.”

The case is Barclays Bank Plc v. Bear Stearns Asset Management Inc., 07-11400, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Thom Weidlich in New York at tweidlich@bloomberg.net.

Last Updated: February 11, 2009 16:43 EST