Lawyers for a number of the world’s biggest banks have asked a U.S. judge to throw out a collection of lawsuits accusing them of manipulating Libor, key interest rates, and cheating investors out of billions of dollars.
The banks involved in the lawsuit include Bank of America Corp, JPMorgan Chase & Co. — while more than 30 lawsuits have been filed in California and New York by plaintiffs ranging from a retired cable-car driver in San Francisco, to the city of Baltimore. The Wall Street Journal reports that plaintiffs are seeking damages that could reach into tens of billions of dollars from financial institutions that determine the London interbank offered rate.
Libor in Court
At a hearing in Manhattan, lawyers for big banks prompted U.S. District Judge Naomi Reice Buchwald to throw out these cases before trial. The cases included a proposed class action lawsuit that alleged violations of antitrust law and the Commodities Exchange Act.
Bloomberg reported that Robert Wise Jr., a lawyer for North Carolina-based Bank of America told the judge, “Libor is not something that’s bought or sold or traded. It’s simply a benchmark, an average. Banks don’t sell Libor.”
Reuters reports that Bill Carmody, a lawyer representing the city of Baltimore, among other plaintiffs, argued that Libor is a crucial component of the price some customers paid for interest-rate swaps and other financial products tied to Libor. Carmody indicated that banks don’t compete against each other when they submit Libor rates to the British Bankers’ Association each business day, though he clarified later, stating that banks do compete over products tied to the interest rate that they set.
Judge Naomi Reice Buchwald did not make a decision Tuesday, but expressed concern as to why it took plaintiffs’ attorneys such a long time to file lawsuits, pointing to media attention surrounding the potential manipulation of Libor in the spring of 2008. The Wall Street Journal reports that Judge Buchwald stated to lawyers: “Your job is not to piggyback on the government. You are supposed to be the private attorneys general who, for legitimate self-interest, seek out wrong doing.”