Libor Manipulation Cases Get the Green Light from U.S. Courts

The U.S. Supreme Court says that bond buyers cannot be made to wait to appeal a decision tossing out their antitrust claims over alleged Libor interest manipulation. The nation’s highest court overturned a ruling that favored Bank of America Corp. (BAC), Barclays PLC (BARC ), Royal Bank of Scotland Group PLC (RBS), and other banks.

The decision involves antitrust litigation claiming that the biggest banks in the world conspired to manipulate the Libor benchmark interest rate. It was then up to the Supreme Court to decide when a party can appeal a ruling that impacts only certain claims in litigation that has been consolidated.

The plaintiffs, Linda Zacher and Ellen Gelboim, bought bonds with Libor-linked interest rates. They sued the banks, accusing them of antitrust violations. Their case was consolidated with over five-dozen Libor cases. The consolidated litigation accuses the banks of trying to manipulate the benchmark rate.

In 2013, a district judge kept certain claims intact in the consolidated lawsuit but threw out the allegations involving federal antitrust law violations. The two women tried to appeal and that is when the U.S. Court of Appeals for the Second Circuit said that it did not have jurisdiction because other claims in the consolidated case had yet to be resolved.

The Supreme Court turned down the banks’ contention that district courts should have that discretion. Instead, said the court, the plaintiffs right to appeal became correct when the district court dismissed their case. Their lawsuit is now allowed to proceed.

In the wake of that ruling, other Libor plaintiffs are responding. In some instances they are asking that dismissals of their antitrust claims be reconsidered under appeal.

In another Libor case, U.S. District Judge Lorna Schofield in Manhattan said that U.S. investors could pursue a national antitrust case accusing a dozen banks of manipulating prices in the $5.3 trillion-a-day foreign exchange market. Defendants include:

• Barclays
• Bank of America
• Deutsche Bank AG (DB)
• Citigroup Inc. (C)
• Royal Bank of Scotland
• BNP Paribas SA
• Goldman Sachs Group Inc. (GS)
• HSBC Holdings Plc. (ADR)
• UBS AG (UBS)
• Morgan Stanley (MS)
• Credit Suisse Group (CS)
• JPMorgan Chase & Co.

Judge Schofield rejected the defendants’ contentions that the lawsuit should be thrown out because of insufficient evidence.

The investors, which include hedge funds, the city of Philadelphia, Pennsylvania, and public pension funds claim that since 2003 the banks conspired to rig currency rates. They contend that traders convened in chat rooms, via email, and through instant messages to manipulate the rates.

JPMorgan settled its part of the lawsuit for around $100 million. Already, six of the defendants have agreed to pay over $4.3 billion in civil fines from regulators in Europe and the US related to the probes into banks accused of manipulating currency rates to make money.

Investor Groups Ask to Join Libor Antitrust Appeal, Litigation Daily, January 28, 2015

UPDATE 2-Big banks fail to dismiss U.S. currency rigging lawsuit, Reuters, January 28, 2015

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