LIBOR, FX and Key Benchmark Rigging Claims against RBS, Barclays, HSBC & Lloyds set to Strengthen for Customers Mis-sold Derivatives
Jaron Dosanjh, 09 March 2018
The door has been opened by the Court of Appeal in PAG v RBS  for misrepresentation claims to be brought by a counter-party to a derivative which is linked to LIBOR, FX or key benchmark where the Swap is with a bank which has been found to have engaged in the manipulation of a benchmark.
This judgment is now the leading authority on claims concerning a customer’s ability to rescind contracts with a bank that has manipulated the London Interbank Offered Rate (LIBOR). Although this case focused on LIBOR-linked derivatives, the same principles will surely apply to other key benchmark rigging (including the manipulation of FX markets).
This decision will be of particular interest to customers that believe they have been mis-sold a Forex hedging products or a LIBOR-linked derivative. These customers of RBS, Barclays, HSBC and Lloyds Plc may potentially have grounds to rescind the derivative contract if the implied representations made by the banks are considered false due to regulatory findings of benchmark rigging. RBS, Barclays, HSBC and Lloyds Plc have all either undermined the integrity of LIBOR or have been fined for Forex failings.
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HSBC scandal further erodes credibility of UK banking industry
AFP, 22 July 2012
London: A scandal erupting at Europe’s biggest bank HSBC has added to concerns over the state of Britain’s financial sector amid the Barclays rate rigging affair and as the industry faces a major shake-up.
HSBC last week apologised and its head of compliance David Bagley resigned after US lawmakers accused the London-based bank of failing to apply anti-laundering rules, benefitting Iran, terrorists and drug dealers.
The HSBC affair follows hot on the heels of the Libor interest rate rigging scandal that has brought down top executives at Britain’s Barclays bank — most notably its chief executive Bob Diamond and chairman Marcus Agius.
Regulators are reportedly investigating HSBC, as well as Credit Agricole, Deutsche Bank and Societe Generale, over alleged manipulation of the Libor rate after Barclays was recently fined £290 million (Dh1.66 billion) over the affair.
Britain’s financial regulator, the Financial Services Authority (FSA), has said its Libor probe is looking at seven groups, which are not only British institutions.
Bank of England governor Mervyn King has meanwhile proposed that central bank governors and regulators discuss Libor reform at their upcoming meeting in Basel, Switzerland, on September 9.
Barclays has admitted attempting to manipulate the Libor and Euribor rates between 2005 and 2009.
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