In a wide-ranging 433-page ruling yesterday, Judge Buchwald concluded (among many other things) that certain individual plaintiffs could bring fraud claims against banks they accuse of manipulating LIBOR.
The introduction of the opinion notes that the fraud claims present the plaintiffs, after four years of litigation, with a potential “comprehensive remedy”:
Four years into this litigation, we have finally been presented with a viable legal theory that provides a comprehensive remedy for injuries proven to be sustained from LIBOR manipulation. According to plaintiffs’ allegations, each panel bank lied to the LIBOR administrator about its own borrowing costs, knowing that entities such as plaintiffs would rely on the accuracy of that information; as was to be expected, plaintiffs then relied to their disadvantage, perhaps reasonably, on this false information. If these allegations prove true, then defendants’ conduct was fraud.
The defendants argued that there could be no reliance on their individual interest rate quotes concerning LIBOR because each quote was “filtered” through the process set by the British Bankers’ Association for setting LIBOR. Judge Buchwald found that argument “overly formalistic”:
[E]ach panel bank’s LIBOR submission affected plaintiffs’ calculations of their cash flows in a direct and measurable way. Although no single defendant’s manipulation makes it liable (absent vicarious liability) for the full extent of LIBOR suppression, each defendant is liable for whatever change it helped cause through the BBA’s calculation process.
Our previous coverage of the LIBOR litigation is here.