Judge Throws Libor Claims Out of Court

That Libor rigging occurred is not in dispute at a US court house, it’s how it is claimed against that matters – and by whom.

(April 2, 2013) — A case brought by a US city and a public pension fund claiming damages related to the Libor-fixing scandal has been dismissed by a New York District judge, despite government agencies reaping billions in fines on the matter.

In May last year, the mayor and city council of Baltimore and the City of New Britain Firefighters’ and Police Benefit Fund launched a class action lawsuit in which they claimed a global conspiracy by member banks of the British Bankers’ Association to fix the rate upon which lending levels are measured.

On Friday, New York District Judge Naomi Reice Buchwald dismissed the majority of the claims, but gave the plaintiffs leave to pursue a number of minor points made in the case.

The dismissal of the case lay on the grounds upon which the plaintiffs had brought it. They had claimed they had suffered “antitrust injury” due to the manipulation of the Libor rate over a number of years.

“Regardless of whether defendants’ conduct constituted a violation of the antitrust laws, plaintiffs may not bring suit unless they have suffered an ‘antitrust injury’,” the judgement said. “An antitrust injury is an injury that results from an anticompetitive aspect of defendants’ conduct. Here, although plaintiffs have alleged that defendants conspired to suppress LIBOR over a nearly three-year-long period and that they were injured as a result, they have not alleged that their injury resulted from any harm to competition.”

The judge gave the plaintiffs leave to resubmit claims of commodities manipulation during some time periods. She also permitted them to make a further claim to include new information that was brought to light in the UK’s Financial Services Authority’s multi-billion dollar settlement with Barclays last year.

“Because the Barclays settlements brought to light information that plaintiffs might not previously have been able to learn, we grant plaintiffs leave to move to amend their complaint to include allegations based on such information, provided that any such motion addresses the concerns raised herein and is accompanied by a proposed second amended complaint,” the judgement said.

The judge added that it might seem strange that the plaintiffs’ claims were dismissed after banks had paid such large amounts in fines to government agencies. However, she said: “Under the statutes invoked here, there are many requirements that private plaintiffs must satisfy, but which government agencies need not. The reason for these differing requirements is that the focuses of public enforcement and private enforcement, even of the same statutes, are not identical. The broad public interests behind the statutes invoked here, such as integrity of the markets and competition, are being addressed by ongoing governmental enforcement. While public enforcement is often supplemented by suits brought by private parties acting as ‘private attorneys general,’ those private actions which seek damages and attorney’s fees must be examined closely to ensure that the plaintiffs who are suing are the ones properly entitled to recover and that the suit is, in fact, serving the public purposes of the laws being invoked.”

To read the full judgement, click here.