McCulley McCluer Files Class Action to Recover Damages for LIBOR-Based Securities Holders
McCulley McCluer filed a class action in the Southern District of New York on behalf of Guaranty Bank & Trust Company and a class of similarly situated holders of LIBOR-Based Securities to recover damages resulting from an alleged multi-year conspiracy by many of the world's largest banks to artificially manipulate LIBOR--the benchmark interest rate for hundreds of trillions of dollars of financial instruments.
The lawsuit alleges that Defendants' scheme served two purposes. First, by artificially manipulating LIBOR, Defendants advantaged their derivative trading positions, allowing them to earn significant undeserved profits. Second, because a bank's LIBOR quote is an indication of the bank's financial health and liquidity position, Defendants' submission of artificially low LIBOR quotes allowed Defendants to portray themselves to the marketplace as financially healthier and more liquid than they actually were.
Investigations regarding Defendants' LIBOR manipulation are ongoing in the United States, Switzerland, Japan, the United Kingdom, Canada, the European Union, and Singapore by at least ten different government agencies, including the United States Department of Justice. Defendants Barclays Bank plc and UBS AG have settled regulatory actions alleging LIBOR manipulation and entered into non-prosecution agreements with the Criminal Division Fraud Section of the DOJ. Press reports indicate that Defendant the Royal Bank of Scotland Group plc is likely to enter into settlements with regulators in the near future.
Defendants' alleged conspiracy to artificially depress LIBOR caused investors, including Guaranty, to earn lower interest coupons on variable interest-rate securities that were determined by reference to LIBOR. The conspiracy also depressed the creditworthiness and market value of notes held by Guaranty and other class members, such as CDOs that were collateralized by financial instruments tied to LIBOR or that entered into hedges tied to LIBOR.