Ticking Time Bomb: Private LIBOR Litigation

more+
less-

imagesCAN5E382One by one global banks are being ensnared in the LIBOR prosecution net.

Late last year UBS, the Swiss banking giant, entered into a massive settlement in which it agreed to pay approximately $1.5 billion in fines and disgorgements to US, UK and Swiss regulators.  The regulatory settlement included a $700 million penalty to the CFTC.  In addition, UBS’s wholly-owned subsidiary, UBS Securities Japan Co. Ltd., agreed to plead guilty to felony wire fraud and pay a $100 million fine.  The Swiss parent company also entered a non-prosecution agreement.  Two former UBS traders were indicted on federal conspiracy, wire fraud and price-fixing.

The regulatory and criminal filings outline conduct demonstrating how UBS attempted and succeeded in manipulating LIBOR benchmark rates and other benchmark rates.  The CFTC’s press release references “more than 2,000 instances of unlawful conduct involving dozens of UBS employees, colluding with other panel banks and inducing interdealer brokers to spread false information and influence other banks.”

These filings provide fresh information to the plaintiffs in the various pending lawsuits against UBS and other major banks in LIBOR-related litigation, including incriminating communications trough emails, texts and other written communications.  This information may encourage other claimants to file cases.   In addition, the UBS documents outlined how third-party interdealer brokers participated in the LIBOR manipulation scheme which may lead to additional defendants being added to the cases beyond global banks.

Aside from the recent UBS settlement, the private LIBOR litigation landscape is fast becoming more complicated.  In August 2011, the judicial panel on multidistrict litigation consolidated 18 class actions before US District Judge Naomi Reice Buchwald, who has not yet certified the class nor ruled on pending motions to dismiss.imagesCA12C5QU

New lawsuits are being filed across the country.  California counties, San Diego and San Mateo, the city of Riverside and the municipal utility district of Oakland, filed separate antitrust complaints in three different federal courts in California.   The plaintiffs’ attorney is recruiting more California cities and counties to join in.  The Los Angeles County Employees Retirement Association recently filed suit against UBS.

If Judge Buchwald certifies the class in her case, California counties and cities would almost certainly be members of the class action.  The lead plaintiff in Judge Buchwald’s case is the city of Baltimore, which has the same causes of action as the California municipalities.

imagesCAF800TKCalifornia plaintiffs’ attorneys will fight to keep the cases in California so that they can bring the cases in front of hometown juries.  It will be interesting to watch as more California counties and municipalities join the litigation.  As more and more claimants line up for payments, headaches for banks are fast growing.

The LIBOR scandal will continue to expand.  The Royal Bank of Scotland recently resolved its case.  The Deutsche Bank is close to resolving its liabilities.  As more information is released as part of these settlements, plaintiffs will line up seeking to recover trebled damages for antitrust violations.

Topics:  Benchmarks, CFTC, Class Action, Class Certification, Conspiracies, Deutsche Bank, Disgorgement, Libor, Price-Fixing, Settlement, UBS, Wire Fraud

Published In: Antitrust & Trade Regulation Updates, Criminal Law Updates, Finance & Banking Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

CONNECT

Michael Volkov
The Volkov Law Group

The Volkov Law Group specializes in white collar defense, corporate compliance, internal... View Profile »


Follow The Volkov Law Group:

Reporters on Deadline