Three European asset management firms accused banks including Bank of America Corp., JPMorgan Chase & Co., HSBC Holdings Plc, Barclays Bank Plc, Citibank NA and Credit Suisse Group AG of conspiring to manipulate the London interbank offered rate.
The banks sold Libor-based futures, options, swaps and
derivative instruments “at artificial prices that defendants caused,” harming
investors, FTC Capital GmbH of Vienna, FTC Futures Fund SICAV of Luxembourg and
FTC Futures Fund PCC Ltd. of Gibraltar said in an April 15 complaint in New
York federal court.
From 2006 to 2009, the banks “collectively agreed to
artificially suppress the Libor rate,” and in early 2008, “during the most
significant financial crisis since the Great Depression,” the rate remained
steady when it “should have increased significantly,” the funds contend.
A person close to an investigation on possible Libor
manipulation said last month that regulators in the U.S. and U.K. were
cooperating in the probe.
The U.S. Justice Department, Securities and Exchange
Commission and Commodity Futures Trading Commission are investigating with the
U.K.’s Financial Services Authority, according to two people familiar with
developments.
FTC Capital bought and sold derivatives based on Libor,
and the two other funds are part of FTC capital, according to court papers.
Libor’s Use
Libor is the rate of interest at which banks borrow funds
from other banks in the London interbank market. It is used internationally as
a short-term benchmark.
“We believe the suit is without merit,” said Danielle
Romero-Apsilos, a spokeswoman for Citigroup.
Lawrence Grayson, a spokesman for Bank of America,
declined to comment.
Allegations in the civil complaint include fraudulent
concealment, violation of the U.S. Commodity Exchange Act, antitrust violations
and unjust enrichment.
The funds seek unspecified damages in behalf of a class
of derivative investors in a jury trial. The suit covers investors “who
transacted Libor-based contracts on the Chicago Mercantile Exchange and
over-the-counter market” from 2006 to June 2009, according to court papers.
Deutsche Bank spokesman Ronald Weichert declined to
comment. Eberhard Roll and Walter Hillebrand-Droste, spokesmen for defendant
WestLB AG in Dusseldorf, weren’t immediately reachable for a comment.
Officials at Lloyds Banking Group Plc and HSBC Holdings
Plc weren’t immediately available. A spokeswoman at Barclays Plc in London
declined to comment.
Jennifer Zuccarelli, a JPMorgan spokeswoman, declined to
comment. A spokeswoman for Credit Suisse in London declined to comment.
The case is FTC Capital v. Credit Suisse, U.S. District
Court, Southern District of New York (Manhattan).
**To contact the reporter on this story: Phil Milford in
Wilmington, Delaware, at pmilford@bloomberg.net.