BusinessBusinessliborBank of America

Judge Dismisses Most Claims In Libor Lawsuits, Ruling In Favor Of Big Banks

HUGE Win For Big Banks
Reuters
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FILE - This Oct. 12, 2011 file photo shows a JPMorgan Chase bank building in New York. JPMorgan Chase and Goldman Sachs need better plans for coping with a severe recession, the Federal Reserve said Thursday, March 14, 2014, giving the banks until September to revise them. (AP Photo/Kathy Willens, File)

NEW YORK (Reuters) - A judge on Friday dismissed a "substantial portion" of claims facing a number of banks in a barrage of lawsuits accusing them of interest-rate rigging.

U.S. District Judge Naomi Reice Buchwald in Manhattan ruled for the banks, which include Bank of America Corp

The judge granted the banks' motion to dismiss the plaintiffs' federal antitrust claims and partially dismissed their claims of commodities manipulation. She also dismissed racketeering and state-law claims.

The decision is a significant setback for private plaintiffs, whose lawsuits had been consolidated before the New York judge as part of a multidistrict litigation proceeding.

In a 161-page opinion, Buchwald said she recognized her ruling might be "unexpected," since several defendants had paid billions of dollars in penalties to government regulatory agencies.

But she said unlike government agencies, private plaintiffs needed to meet many requirements under the statutes to bring a case.

"Therefore, although we are fully cognizant of the settlements that several of the defendants here have entered into with government regulators, we find that only some of the claims that plaintiffs have asserted may properly proceed," she wrote.

The lead lawyers for the plaintiffs, Bill Carmody of Susman Godfrey and Michael Hausfeld of Hausfeld LLP, did not immediately respond to requests for comment.

More than a dozen banks and brokerages are under investigation by regulators worldwide for manipulating benchmark rates such as Libor, which have been the basis for more than $550 trillion in financial products.

Three banks have reached settlements with authorities to date. Most recently, Royal Bank of Scotland Group PLC

Other defendants facing private lawsuits included Citigroup Inc

Representatives for the various banks either did not immediately respond to requests for comment or had no immediate comment.

The cases are In Re: Libor-Based Financial Instruments Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 11-md-2262.

(Reporting by Nate Raymond in New York, additional reporting by Luciana Lopez; editing by Leslie Gevirtz, G Crosse)

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Before You Go

Bankers Who Want To Break Up Big Banks
Sanford "Sandy" Weill(01 of07)
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The former Citigroup Chairman and CEO told CNBC in 2012 that "we should probably... split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, and have banks do something that's not going to risk the taxpayer dollars, that's not going to be too big to fail."
John Reed(02 of07)
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Retired Citigroup chairman John S. Reed wrote to the New York Times in 2009: "Some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance makes sense." (credit:AP)
Phil Purcell(03 of07)
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Phil Purcell, former chairman and CEO of Morgan Stanley, argued in a Wall Street Journal op-ed that the big banks should break their divisions up into separate firms. "These businesses should be spun off to give the value to shareholders and let investment banks be owned privately -- hopefully largely by employees... so that the interests of the owners and bankers are aligned," he wrote. (credit:AP)
David Komansky(04 of07)
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Former Merill Lynch CEO, David Komansky, is another former megabank CEO calling for the breakup of "too big to fail" banks, according to Simon Johnson. Komansky told Bloomberg TV that he "regrets" calling for the repeal of Glass-Steagall, which allowed banks to become bigger than ever. (credit:AP)
Sallie Krawcheck(05 of07)
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Former Citigroup CFO Sallie Krawcheck has argued that big banks are simply too complex to manage. (credit:AP)
Richard Parsons(06 of07)
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After announcing the end of his 16-year tenure on the board of Citigroup, Richard Parsons told Bloomberg, "to some extent what we saw in the 2007, 2008 crash was the result of the throwing off of Glass-Steagall. Have we gotten our arms around it yet? I don't think so because the financial-services sector moves so fast." (credit:AP)
Scott Shay(07 of07)
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Scott Shay, the founder and chairman of Signature Bank, wrote in American Banker that "reinstating Glass Steagall should be the highest priority" for financial regulators. (credit:AP)
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