Civil Antitrust Lawsuits Reinstated Against 16 Banks in Libor Case
May 23 2016 - 1:30PM
Dow Jones News
In a setback for some the world's largest financial
institutions, a U.S. appeals court on Monday reinstated the private
antitrust lawsuits filed against 16 banks for allegedly rigging
Libor interest rates.
The ruling from the Court of Appeals for the Second Circuit
reverses a lower court decision from 2013, in which U.S. District
Judge Naomi Buchwald dismissed the lawsuits because she said the
banks' alleged conduct did not violate federal antitrust laws.
The lawsuits accuse 16 major banks—including J.P. Morgan Chase
& Co., Bank of America Corp. and Citigroup Inc.—of collusion in
manipulating the London interbank offered rate, or Libor, to the
detriment of the banks' consumers.
The plaintiffs, who owned various financial instruments that
were affected by Libor, claim the returns on their investments were
depressed by the banks' collusion. The lawsuits were filed by
several groups of plaintiffs, including the local governments of
cities like Baltimore, San Diego and Houston.
Judge Buchwald had said the plaintiffs failed to show they were
injured by the alleged rate manipulation. She said that because
setting Libor was a "cooperative endeavor," there could be no
anticompetitive harm to consumers.
But a federal appeals court Monday disagreed and kicked the case
back to the lower court for further proceedings. A three-judge
panel found that the plaintiffs did show an antitrust injury "by
alleging that they paid artificially fixed higher prices."
If this private litigation is ultimately successful, the
potential total bill to banks could be in the billions, analysts
have estimated.
Write to Nicole Hong at nicole.hong@wsj.com
(END) Dow Jones Newswires
May 23, 2016 13:15 ET (17:15 GMT)
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