Baltimore-Led Lawsuit Against LIBOR Fraud, Now Consolidating Into a Nationwide Mega-Action vs. Banksters
July 17, 2012 • 8:57AM

On July 2 in New York Federal Court, lawyers for 16 mega-bank defendants (JPMorgan Chase, Barclays, Royal Bank of Scotland, etc.) jointly filed for dismissal of anti-trust litigation against them, over charges of LIBOR rate-manipulation, brought by numbers of plaintiffs, instigated in August 2011, by the City of Baltimore, which since then, has expanded into a consolidated mega-class action by many more government entities, funds and individuals.

The accused banksters have the legal prospects of a snowball in hell. Statements documenting the harm and loss resulting from their LIBOR-rigging, and the evil behind it, are coming forth daily. Cities have paid out millions to the mega-banks in the rigged swaps deals, while government functions were cut and shut. Baltimore Mayor Stephanie Rawlings-Blake said last week that the LIBOR rate manipulation hurt Baltimore and other cities at the very worst time—the height of the recession. Cities tried to cut expenses by cutting fire, police, recreation and other services, all the while that the banks added to the city budget deficit by artificially setting interest rates low, to underpay the city on its investments. "We cannot stand by when we feel that we are being cheated," she told CBS. "You're talking about $1 or $2 million. You know, that's a fire company, that's recreation centers. That's services that our city needs, and we're going to fight for that."

The Baltimore Firefighters Union, Michael Campbell, said that Baltimore's safety is affected by what the banks did. Some of the fire stations had to be closed. "Say, they're closed today and nobody's there. It's going to take a longer time for the next truck company to get here. So yes, it's a dramatic impact on safety."

In the latest plaintiff consolidation, on July 12, the Sheboygan Community Bank & Trust RICO suit (filed in May) — intended as a class action for thousands of U.S. community banks — was put together with three other class-action proposals, accusing the mega-banks of violating anti-trust. This constitutes category four of types of plaintiffs. The other three are: plaintiffs (such as Atlantic Trading USA, in Chicago) who traded LIBOR-linked securities on exchanges; plaintiffs (such as Baltimore) who purchased LIBOR-linked securities from banks; and those (such as Charles Schwab investment firm), who invested in securities, whose interest payments were based on LIBOR. Charles Schwab was a co-initiator of the original lawsuit with City of Baltimore in 2011.

The case, with demand for a jury, is before the United States District Court Southern District of New York, as: In re: LIBOR-Based Financial Instruments Antitrust Litigation, under Judge Naomi Reice Buchwald. The litigation involves 24 class-action, or group-suits against the named banks, accused of conspiring to suppress LIBOR, by understating their borrowing costs to the British Bankers Association. (Case I.D.: MDL No. 2262, 11 Civ. 2613.)

PLAINTIFFS. In the consolidated amended complaint, as of May 1, 2012, among the many plaintiffs are: the Mayor and City Council of Baltimore, City of New Britain [Connecticut] Firefighters and Police Benefit Fund, several individuals, and many private investor funds. Since then, the Sheboygan Community Bank (Wisconsin), etc.

DEFENDANTS. Bank of America Corporation, Bank of Tokyo-Mitsubishi UFJ, Barclays Bank Plc, Citibank NA, Citigroup Inc., Cooperative Central Raiffeisen-Boerenleenbank B.A., Credit Suisse Group AG, Deutsche Bank AG, HBOS Plc, HSBC Bank Plc, HSBC Holdings Plc, J.P. Morgan Chase & Co., JPMorgan Norinchukin Bank, WestDeutsche Immobilienbank AG, WestLB AG.

- Nature of Charges: Collusion, Manipulation -

The nature of the charges, as laid out court papers (Amended Consolidated Class Action Complaint, relating to: Exchange-Based Plaintiff Action, April 30, 2012) including the following:

SUMMARY OF ALLEGATIONS:

"This action arises from Defendants' unlawful and intentional misreporting and manipulation of — as well as their combination, agreement and conspiracy to fix — LIBOR rates and to restrain trade in the market for LIBOR-based derivatives during the Class Period," which is defined as August 8, 2007 through at least May 17, 2010. Extensive documentation includes graphs of the patterns of rates, in general and by each defendant bank.

"Defendants collusively and systematically manipulated LIBOR rates..."

NATURE OF CHARGES:

"This case arises from the manipulation of LIBOR for the U.S. dollar ("USD-LIBOR" or simply "LIBOR") — the reference point for determining interest rates for trillions of dollars in financial instruments — by a cadre of prominent financial institutions. Defendants perpetrated a scheme to depress LIBOR for two primary reaons. First, well aware that the interest rate a bank pays (or expects to pay) on its debt is widely, if not universally, viewed as embodying the market's assessment of the risk associated with the bank, Defendants understated their borrowing costs to the British Bankers' Association ("BBA") (thereby suppressing LIBOR) to portray themselves as economically healthier than they actually were....

"Second, artificially suppressing LIBOR allowed Defendants to pay lower interest rates on LIBOR-based financial instruments that Defendants sold to investors...."