From the
CBC News website:
"...A federal Appeals Court in New York City has reinstated lawsuits
against 16 of the world's largest banks, including the Royal Bank of
Canada, alleging they colluded to manipulate a benchmark interest rate.
The 2nd U.S. Circuit Court of Appeals in Manhattan on Monday restored
the lawsuits, which had previously been dismissed by a lower-court
judge.
The lawsuits were brought by people who bought investments sold by
the banks that were based on a key lending rate known as LIBOR, an
acronym for London Interbank Offered Rate, with evidence the banks were
lying about and rigging in their favor.
A previous judge had dismissed the lawsuits because he
said the LIBOR setting process was collaborative rather than
competitive. That judge also found any manipulation of the rate did not
cause investors anti-competitive harm.
But a new judge disagreed with that Monday, and reinstated the suits.
'Appellants sustained their burden of showing injury by alleging that
they paid artificially fixed higher prices,' Circuit Judge Dennis
Jacobs wrote for a three-judge appeals panel.
LIBOR is a lending rate that is the basis for hundreds of trillions
of dollars worth of consumer loans and savings rates around the world.
It's a number, calculated and released daily by banks in London, that is
supposed to show the rate at which they are lending money to each other
for the short term.
The banks are alleged to have lied about their internal rates to put
the LIBOR rate at a more favorable level for them. That would move
other interest rates for consumers and businesses higher or lower
than otherwise should have been.
'A LIBOR increase of one per cent would have allegedly cost the Banks
hundreds of millions of dollars,' the judges said in the ruling.
Rigging the rate cost the bank's customers — large institutions named
in the lawsuit such as the University of California, and cities such as
Baltimore, Houston and Philadelphia — billions over the years,
money they are now trying to recoup.
The financial stakes of reinstating numerous pricey lawsuits for
damages are huge. As the judges' put it in their decision: 'Requiring
the banks to pay … 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, bankrupt 16 of the world's
most important financial institutions.'
Individual lawsuits could still be thrown out, but Monday's ruling means they must all be reconsidered on a case-by-case basis.
In addition to the Royal Bank of Canada, the following banks are named in the suits:
- Royal Bank of Scotland.
- Bank of America.
- Société Générale.
- UBS.
- Barclays.
- Citigroup.
- Credit Suisse.
- Deutsche Bank.
- HSBC.
- JPMorgan Chase.
- Norinchukin Bank.
- Rabobank.
- Portigon.
- Bank of Tokyo-Mitsubishi.
- Lloyds.
Worldwide, those banks and others have already paid more than $9
billion in fines related to LIBOR rigging, and almost two dozen people
have been charged in relation to the story. The Financial Conduct
Authority, a regulator that governs banking institutions in London, has
said it will look at better ways of calculating the rate in the wake of
the scandal.
A lawyer for the banks says they're considering the ruling..."
Labels: banks, libor, libor_fixing, libor_fraud, libor_scandal
