Five Banks Settle LIBOR Manipulation Suit for $22 Million
Meg Slachetka, 13 October 2020
Last week, Judge Naomi Buchwald of the Southern District of New York provided final approval of a nearly $22 million settlement between a class of indirect investors and five Wall Street banks that the plaintiff investors accused of manipulating the London Interbank Offered Rate (LIBOR) in violation of the Sherman Act. The plaintiffs are over-the-counter (OTC) investors who indirectly interacted with the defendant banks via interest rate swaps and other transactions.
These plaintiffs made purchases from other banks that are not defendants in the case; the five settling defendants are JPMorgan, Citibank, Bank of America, HSBC, and Barclays. The suit is one of many filed after Barclays admitted in 2012 that it had manipulated LIBOR.
LIBOR is a benchmark that is designed to reflect the cost of borrowing funds in the market and is applied to many types of financial instruments, including futures, swaps, options, and bonds. It is also referenced by consumer lending products such as mortgages, credit cards, and student loans. The alleged LIBOR manipulation had a widespread impact on global markets and consumers, including government entities and not-for-profit organizations.
