The biggest banks in the world have admitted to rigging LIBOR, a key interest rate that determines the value of trillions of dollars' worth of assets — they paid billions in fines as a result.
But the LIBOR-rigging scam cost investors and bond-issuers (including cities, pension funds, and charitable trusts) untold billions. A group of high-profile investors have been attempting to sue the banks involved to recover damages, and now they've won a key victory. A US appeals court judge has given the investors the go-ahead to sue 16 of the largest banks in the world for triple damages, even though a victory would "not only bankrupt 16 of the world's most important financial institutions, but also vastly extend the potential scope of antitrust liability in myriad markets where derivative instruments have proliferated."
The appellate judges reversed a lower-court ruling on one issue — whether the investors had adequately claimed in their complaints to have been harmed — while sending the cases back for the judge to consider another issue: whether the plaintiffs are the proper parties to sue, in part because their claims, if successful, provide for triple damages that could overwhelm the banks.
"Requiring the banks to pay treble damages to every plaintiff who ended up on the wrong side of an independent Libor‐denominated derivative swap would, if appellants' allegations were proved at trial, not only bankrupt 16 of the world's most important financial institutions, but also vastly extend the potential scope of antitrust liability in myriad markets where derivative instruments have proliferated," the U.S. Court of Appeals in New York said in the ruling.
Bank of America Corp., HSBC Holdings Plc, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Royal Bank of Canada and Royal Bank of Scotland Group Plc are also among the banks sued in Manhattan.
Banks Must Defend Libor Lawsuits After Judges Warn of Impact
[Bob Van Voris/Bloomberg]
(via Naked Capitalism)
(Image: too big to fail, Jeff, CC-BY)