In 2011, the city of Baltimore and the New Britain Firefighters’ Benefit Fund sued more than a dozen major U.S. banks, alleging that the banks engaged in antitrust violations that resulted in injured investment returns for the plaintiffs. Specifically, the plaintiffs allege that the banks manipulated the Libor, a key metric that sets interest rates using data computed daily from domestic and international banks. The plaintiffs claim that by “suppressing” the Libor, the banks concealed their level of risk during the financial crisis. The allegations of wrongdoing carry serious weight: last week, the British banking behemoth Barclays Plc agreed to pay U.S. and British regulators $455 million in fines for manipulating the Libor.
The case is being litigated in the U.S. District Court for the Southern District of New York. Most recently, the banks filed a Motion to Dismiss, arguing that the evidence does not support the existence of a conspiracy to manipulate rates. The district judge, Naomi Reice Buchwald, has yet to rule on the Motion.
Although it is unclear whether any Florida municipalities are considering similar suits, WSH does have experience handling such matters. After the Lehman Brothers collapse in 2008, WSH’s Litigation Division and Local Government Division were called upon to evaluate whether certain of our city clients could sue Lehman for pension losses. Similarly that could happen here in the LIBOR scandal and our Municipal Government Law Group and Litigation Group are prepared to be on the cutting edge of the issue as it develops.
Author(s): Michael S. Popok
