LIBOR Manipulation Settlements

LIBOR Manipulation Settlements

LIBOR-Based Financial Instruments Antitrust Litigation, No 11-md-02262

Settlement Fund:                 $250 million (expected to be billions once additional Defendants settle)
Settlement Period:               August 2007 – May 2010
Claim Filing Deadline(s):     December 21, 2017 ($120 million fund via Barclays); March 29, 2018 ($130 million fund via Citibank)

Settling Defendants:
Barclays, Citibank

Remaining Defendants:
Barclays Bank, Credit Suisse Group; Bank of America; JPMorgan Chase; HSBC; Lloyds Banking Group; WestLB; UBS; RBS; Citizens Bank; Deutsche Bank; Rabobank; Norinchukin; HBOS; Société Générale; RBC; and Bank of Tokyo.


Overview

It is alleged that some of the world’s largest banks colluded to manipulate the London Interbank Offered Rate (LIBOR), the world’s leading short-term interest rate benchmark. LIBOR is used as a reference point to set interest rates for a variety of financial products, from simple loans to complex derivatives. Defendants are accused of conspiring to have manipulated LIBOR at artificially low levels. Plaintiffs allege that this manipulation reduced competition, inaccurately reflected risk in the financial system, and decreased investment yields for class members. Defendants are accused of using the following methods of manipulation:

  • Submitting artificially low rates that did not accurately reflect the banks’ actual borrowing costs.
  • Using strategies such as ‘bunching’ their rate submissions around lower price targets to ensure the effective rate would be suppressed when calculated by Reuters.
  • Suppressing LIBOR during the financial crisis to reflect better creditworthiness and financial strength, allowing banks to negotiate better rates on individually negotiated products.
  • Colluding via private chat rooms, sharing trading strategies and confidential order information.

This class action follows other government led settlements with a number of the same banking institutions regarding LIBOR manipulation and other related allegations. In these past actions, banks have paid over $6 billion in fines and penalties to U.S. and U.K. government agencies.


Eligibility

All organizations, entities or persons that purchased in the United States, directly from a Defendant (or Defendants’ affiliates), a Qualified U.S. Dollar LIBOR-Based Instrument and that owned the U.S. Dollar LIBOR-Based Instrument any time during the Eligibility Period (August 2007 - May 2010).

  • Qualified U.S. Dollar LIBOR-Based Instrument
    • Any term, provision, obligation or right to be paid or receive interest based upon the U.S. Dollar LIBOR rate. Instruments include, but are not limited to: interest rate swaps, asset swaps, collateralized debt obligations, credit default swaps, forward rate agreements, inflation swaps, total return swaps, options, and floating rate notes.

*Does Not include an instrument that includes only a term, provision or obligation or right to pay interest based on the U.S. Dollar LIBOR rate, such as a business, home, student or car loans, or credit cards.


Status

  • A settlement for $120 million between Barclays and OTC Plaintiffs has been preliminarily approved, serving as an ‘ice-breaker’ for future settlements with remaining Defendants.
  • Barclays has agreed to assist class members in their pursuit against remaining Bank Defendants.
  • Citibank has reached a $130 million settlement.
  • The US Supreme Court recently denied a petition from several banks seeking to throw out the antitrust claims against them.
  • Settlement negotiations are still being pursued against the remaining Defendants.