US Regulator Sues 16 Banks for Rigging Libor Rate
March 15, 2014 10:19 PM EST
The Federal Deposit Insurance Corp sued 16 of the world's largest banks on Friday, accusing them of cheating dozens of other now defunct banks by manipulating the Libor interest rate.
Logos are seen outside a branch of Barclays bank in London July 30, 2013.
The global financial institutions broke certain swap contracts they had entered into with the now-closed banks, by separately colluding to rig the Libor rate to which the contracts were tied, the FDIC said.
Some of the banks accused in the lawsuit, including Barclays Plc and UBS, have already paid some $6 billion to resolve charges from US and European authorities that they worked to manipulate benchmark interest rates.
They have also been sued by investors and others who claim they lost money due to the manipulation. A federal judge last March dismissed many of those claims that were based on antitrust law, but has yet to rule on cases that rely on the "breach of contract" theory used by the FDIC.
"These look very much like claims that I think are going to have a much better chance with the court," said Daniel Brockett, a lawyer with Quinn Emanuel Urquhart & Sullivan who had brought other cases against banks over Libor manipulation.
A representative of the FDIC declined comment. Representatives of the banks declined comment or did not respond to a request for comment.
Libor, which is the average rate that a panel of banks say they can borrow unsecured funds, has become a key rate globally, underpinning more than $550 trillion in financial products, from home loans to derivatives.
The financial institutions' conduct caused "substantial losses" to 38 banks that the US regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank, the FDIC said.
The regulator did not quantify the losses at issue. The lawsuit also did not specify what damages the FDIC is seeking.
The lawsuit also accused the British Bankers' Association, the UK trade organization that during the period at issue administered Libor, of participating in the scheme.
The BBA had said it independently monitored the banks' Libor submissions, and represented that Libor was a "transparent" benchmark, even though it knew those statements were false, the FDIC said. A representative of the BBA declined comment.
Other defendants in the lawsuit are Rabobank, Lloyds Banking Group plc, Societe Generale, Norinchukin Bank NORB.UL, Royal Bank of Canada, Bank of Tokyo-Mitsubishi UFJ MTFGI.UL and WestLB AG.
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- Pope Francis: World War III Has Started On Piecemeal
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
Join the Conversation
- Kate Middleton Pregnancy Sickness: Prince Harry Cancels His 30th Birthday Party, Opts For Simple Gathering
- 24-year-old Playboy Model Marries 81-year-old Construction Tycoon Richard Lugner
- ISIS Murder Videos 'Turning On' Foreign Jihadists To Fight US and Britain [VIDEO]
- Rare Blue Flawless Diamond, Costing $25.6 Million, Is The Newest Attraction At The Natural History Museum
- Auckland Gay Men Warned of Having Sex in Bushes of Public Park
- Google Release Roundup: Nexus 5 2014, Nexus 6, Nexus 8 and Android L Killer Features
- Samsung Attacks iPhone 6 Plus Through New Galaxy Note 4 Commercial: Apple Claims Imitating Galaxy Note Phablets
- iPhone 6 And IPhone 6 Plus Sold Out, New Stocks To Arrive In October
- Pregnant Kate Middleton May Call Off Malta Trip Due To Sickness: Royal Couple Will Move To Anmer Hall Residence
- Moto G (Gen 2) vs. Xiaomi Redmi 1S—Specifications, Features And Price Showdown
- Nexus 6, 8 Release Dates Imminent as Moto X Pre-Order Begins & Nexus 7 Deals Ramp Up
- iPhone 6 And iPhone 6 Plus Shipping Has Begun, Expected To Reach Customers’ Doorstep On Sept 19 Launch Date