Banks Score Victory in LIBOR Litigation

Plaintiffs suing 16 banks for allegedly manipulating LIBOR, the benchmark global interest rate, suffered a big setback on March 29 in federal court. In a 161-page decision, In re: LIBOR-Based Financial Instruments Antitrust Litigation, 11 MD 2262, Southern District Judge Naomi Reice Buchwald (See Profile) gutted claims by four categories of plaintiffs in the consolidated private antitrust litigation. Most importantly, the judge dismissed core antitrust claims from three major proposed class actions—brought by bondholders, purchasers of interest rate swaps, and commodities futures traders—and tossed individual antitrust claims filed by various Charles Schwab & Co. units. Buchwald also threw out racketeering allegations and ruled that some of the plaintiffs’ commodities manipulation claims were time-barred.

Fatally for the banks, Buchwald ruled that the process for submitting LIBOR quotes to the British Bankers Association isn’t competitive by nature, "and plaintiffs have not alleged that defendants’ conduct had an anticompetitive effect in any market in which defendants compete."