By Jonathan Stempel
NEW YORK – A U.S. appeals court on Thursday revived litigation accusing a slew of large banks of conspiring to rig the Libor interest rate benchmark, including during the 2008 financial crisis, to boost profits at investors’ expense and make the banks appear healthier than they were.
The 2nd U.S. Circuit Court of Appeals in Manhattan said a lower court judge had jurisdiction over antitrust claims by investors including Charles Schwab Corp that bought various Libor-based products from the banks, or bought Libor-based futures on the Chicago Mercantile Exchange.
Without ruling on the merits, Circuit Judge Richard Sullivan said accusations that bank executives and managers in the United States were ordering the suppression of Libor provided jurisdiction under a conspiracy-based theory of liability.
The appeals court adopted that theory after U.S. District Judge Naomi Reice Buchwald in Manhattan had dismissed investor claims in 23 separate cases from the decade-old litigation.
Thursday’s 43-page decision by a three-judge panel revived many of those claims, and the appeals court returned those cases to Buchwald for further proceedings.
The defendant banks sat on a panel involved in setting Libor.
They included Bank of America, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds Banking Group, NatWest, Norinchukin Bank, Rabobank, Royal Bank of Canada, Societe Generale, UBS and WestLB.
Lawyers representing the banks and the investors at the oral arguments, which were held in May 2019, did not immediately respond to requests for comment.
Libor, or the London Interbank Offered Rate, has underpinned hundreds of trillions of dollars of transactions, including $265 trillion at the start of 2021.
It has been used to set interest rates on such things as credit cards, student loans and mortgages.
The benchmark is being scrapped https://www.reuters.com/markets/europe/libor-era-nears-its-end-2021-12-28 on Jan. 1, 2022 in the wake of rate-rigging that led to fines for several banks.
It will be replaced by alternative rates, preferably those recommended by several banks and based on actual transactions.
The case is In re Libor-Based Financial Instruments Antitrust Litigation, 2nd U.S. Circuit Court of Appeals, Nos. 17-1569, 17-1915, 17-1989, 17-2056, 17-2343, 17-2347, 17-2351, 17-2352, 17-2360, 17-2376, 17-2381, 17-2383 and 17-2413.
(Reporting by Jonathan Stempel in New York; editing by Richard Pullin)