libor manipulation litigation: latest trends and...

LIBOR Manipulation Litigation:

Latest Trends and Developments Pursuing and Defending Individual and Class Action LIBOR-Related Actions

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

TUESDAY, OCTOBER 23, 2012

Presenting a live 90-minute webinar with interactive Q&A

Brian Murray, Partner, Murray Frank, New York

Daniel L. Brockett, Partner, Quinn Emanuel Urquhart & Sullivan, New York

Thomas A. Dubbs, Partner, Labaton Sucharow, New York

Sound Quality

If you are listening via your computer speakers, please note that the quality of

your sound will vary depending on the speed and quality of your internet

connection.

If the sound quality is not satisfactory and you are listening via your computer

speakers, you may listen via the phone: dial 1-888-450-9970 and enter your

PIN -when prompted. Otherwise, please send us a chat or e-mail

[email protected] immediately so we can address the problem.

If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing Quality

To maximize your screen, press the F11 key on your keyboard. To exit full screen,

press the F11 key again.

For CLE purposes, please let us know how many people are listening at your

location by completing each of the following steps:

• In the chat box, type (1) your company name and (2) the number of

attendees at your location

• Click the SEND button beside the box

FOR LIVE EVENT ONLY

If you have not printed the conference materials for this program, please

complete the following steps:

• Click on the + sign next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

LIBOR MANIPULATION LITIGATION: LATEST TRENDS & DEVELOPMENTS: PURSUING AND DEFENDING INDIVIDUAL

AND CLASS ACTION LIBOR-RELATED ACTIONS

Brian P. Murray, Esq.

MURRAY FRANK LLP

275 Madison Avenue, Suite 801

New York, New York 10016

212-682-1818

[email protected]

WHAT IS LIBOR?

• LIBOR is published under the auspices of the British Bankers’ Association (“BBA”), a trade association with over 200

member banks that addresses issues involving the United Kingdom banking and financial services industries. The BBA defines LIBOR as:

The rate at which an Individual Contributor Panel bank could borrow funds, were it to do so by asking for and then accepting inter-bank offers in reasonable market size, just prior to 11:00 [a.m.] London time.

This definition has been in place since approximately 1998 • LIBOR is calculated for ten currencies. The LIBOR for a given currency is the result of a calculation based upon submissions

from a panel of banks for that currency (the “Contributor Panel”) selected by the BBA. Each member of the Contributor Panel submits its rates every London business day through electronic means to Thomson Reuters, as an agent for the BBA, by 11:10 a.m. London Time. Once each Contributor Panel bank has submitted its rate, the contributed rates are ranked. The highest and lowest quartiles are excluded from the calculation, and the middle two quartiles (i.e., 50% of the submissions) are averaged to formulate the resulting LIBOR “fix” or “setting” for that particular currency and maturity

• The LIBOR contribution of each Contributor Panel bank is submitted to between two and five decimal places, and the LIBOR

fix is rounded, if necessary, to five decimal places. In the context of measuring interest rates, one “basis point” is one-hundredth of one percent (0.01%)

• Thomson Reuters calculates and publishes the rates each business day by approximately 11:30 a.m. London Time. Fifteen

maturities ( or “tenors”) are quoted for each currency, ranging from overnight to twelve months. The published rates are made available worldwide by Thomson Reuters and other data vendors through electronic means and through a variety of information sources. In addition to the LIBOR fix resulting from the calculation, Thomson Reuters publishes each Contributor Panel bank’s submitted rates along with the names of the banks

• Futures contracts settle on Int’l. Money Market dates, 3rd Wed. of March, June, Sept. & Dec. Settlement price calculated by lowest rate 2 days prior (Monday)

6

BIGGEST CASE EVER?

• Somebody thinks so. See Exhibit A

• Or Is It?

• Is it a zero-sum game?

7

WHAT IS SIZE OF THE LIBOR-RELATED

MARKET?

• OTC derivative contracts 1st half of 2011: $554 trillion short term interest rate contracts traded in London 2011: $477 trillion (241 trillion relating to 3 month Eurodollar)

• Mortgage Market adjustable rate mortgages can be reset tied to LIBOR rate (Berkshire case) (Ex. B) • Bond Market – dividend rates can be tied to LIBOR (Gelboim case) (Ex. C) • Stock Market – preferred dividend rates can be tied to LIBOR (Lieberman case) (Ex. D) • Eurodollar futures on Chicago Mercantile Exchange in 2011: $564 trillion (Exchange-Based Plaintiff Action) (Ex. E)

• Eurodollar future contract: the contract that would be paid on a Eurodollar deposit of $1 million for a term of 3 months. Settlement price of 3 month contract is 100 minus 3 month $ LIBOR on settlement date

• LIBOR-Based Derivatives (Baltimore case) (Ex. F) • Any security tied to LIBOR that paid an artificially low return (Schwab case- non-class action) (Ex. G) • Mortgage Market - adjustable rate mortgages with LIBOR reset (Adams case) (Ex. H)

8

SMOKE

• April 16, 2008 - WSJ Article (Ex. I) (LIBOR Fog: Bankers Cast Doubt on Key Rate Amid Crisis) • April 28, 2008 - WSJ Article (Ex. J) (LIBOR Surges After Scrutiny Does Too) • May 29, 2008 - Bloomberg Article (Ex. L) (stating banks submitted lower rates to avoid bad market

perceptions) • May 30, 2008 - WSJ Analysis (Ex. K) • April 10, 2008 - Citibank Report (Ex. M) (stating LIBOR at times no longer represents level at which banks

extend loans to others) • Feb. 22, 2009 – LIBOR left in Limbo: A Call for More Reform (Ex. U) • April 2, 2010 - Snider & Youle Article “Does the LIBOR Reflect Banks’ Borrowing Costs?” (Ex. N) • March 18, 2011 – WSJ Article “U.S. LIBOR Probe Includes BofA, Citi, UBS” (Ex. O)

9

FIRE United States Department of Justice Non-Prosecution Agreement (June 26, 2012) (Exhibit P)

Penalty of $160 million dollars Statement of Facts

• Department of Justice Appendix A 7 ¶ 16, ¶ 19: traders asked for a higher submission on LIBOR • Department of Justice Appendix A 10 ¶ 23: Barclays traders communicated with other Contributor Panel Banks regarding

LIBOR & EURIBOR • Department of Justice Appendix A 12 ¶ 28: Barclays traders communicated with EURIBOR contributor banks • Department of Justice Appendix A 22 ¶ 49: Barclays submitted low Yen & Sterling LIBOR rates • Barclays made LIBOR and Eurodollar submissions which took into account requests by interest rate derivatives traders,

including traders at other banks, motivated by profit & to benefit Barclay’s trading positions from June 2005 to September 2007, and “occasionally thereafter through 2009.” (May 2009)

• Barclay’s attempted to influence other bank’s submissions from August 2005 through May 2008

• 8/07 -> 1/09 Barclays made LIBOR submissions which took into account negative media perceptions of Barclay’s LIBOR

submissions (i.e. – Barclay’s was higher than other banks & having problems)

10

FINANCIAL SERVICES AUTHORITY FINAL NOTICE 6/27/12 (Exhibit Q)

• £ 59.5 fine under Section 206 of Financial Services and Markets Act of 2000

• Settled early – 30% (Stage 1) discount (full penalty would have been £ 85 million) • Findings: What’s not in Department of Justice SOF:

• 1/05 -> 6/10 Barclay’s had inadequate risk management systems in relation to LIBOR and EURIBOR

submissions

• Barclay’s internal compliance department failed to address issues • Traders attempted to influence submissions from January 2005 through July 2008 (slightly different

than Department of Justice findings) (8/05 to 5/08) • Dates for “media perception” claims 9/07 to 5/09 (slightly different from Department of Justice [8/07

to 1/09]) • The Wheatley Review of LIBOR (Aug. 2012) (Ex. V)

report commissioned by the Chancellor of the Exchequer

11

COMMODITY FUTURES TRADING COMMISSION

FINDINGS (Exhibit R)

• Generally same facts as Department of Justice and Financial Services Authority

12

COURT OF ONTARIO ORDER TO PRODUCE RECORDS

(May 18, 2011) (Exhibit S) • Cooperating Party (Unnamed) • Documents requested from HSBC, Royal Bank of Scotland, Deutsche Bank, JP Morgan, and Citibank • Cooperating Party stated others entered into agreements to submit high and/or low LIBOR Yen bids

13

ANOTHER COUNTRY HEARD FROM: SINGAPORE JOINS THE FRAY

(Exhibit T)

14

Overview

Over twenty Libor-related actions have been

consolidated before Judge Buchwald in the

Southern District of New York.

Antitrust claims are a focus of most of the

complaints that have already been filed.

Allows for treble damages, and thus is attractive

to plaintiffs.

16

The Antitrust Laws

The federal Sherman Antitrust Act prohibits “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade.” 15 U.S.C. § 1.

State laws are very similar.

For instance, California prohibits “[a] combination of capital, skill or acts by two or more persons . . . [t]o create or carry out restrictions in trade or commerce.” Cal. Bus. & Prof. Code § 16720.

17

Pleading Standard

Complaints must have sufficient factual detail as to make the right to relief appear “plausible” under Iqbal and Twombly.

Banks argue that “plausibility” not shown because there is no evidence of a conspiracy—as opposed to, at most, evidence of unilateral decisions to underreport borrowing costs.

Two primary sources of factual support currently available: Statistical studies showing that Libor departed from historical norms. Settlement agreements between regulators and certain banks.

18

Evidence of Collusion Among the Banks

Statistical analysis found that Libor submissions departed from historical norms starting in mid-2007.

Libor and the Federal Reserve Euordollar Deposit Rate historically moved in tandem, but diverged in August 2007.

As banks were perceived as riskier by the market (as determined by pricing of credit default swaps), their reported borrowing costs nonsensibly went down around the same time. Banks’ bids in Federal Reserve auction were higher than their Libor submissions, even though auction requires posting of collateral.

19


Statistical analysis found that Libor submissions departed from historical norms starting in mid-2007.

One-month Libor rate submissions were relatively constant, even as many other rates (like one-month T-bill) fluctuated throughout the period.

Comparison of Libor submissions to notes and certificates of deposit of the bank show their real-world borrowing costs diverged from the Libor submissions starting in August 2007. Citibank, Bank of America, Chase, and JPMorgan’s submissions between 2007-2008 were all “bunched” around the lowest rate that could be submitted without getting excluded from Libor’s published rate.

20


Barclays settled charges it made false submissions in three (the banks argue) distinct ways.

Barclays’ traders “at times on a daily basis” requested that the bank’s submission be adjusted up or down in order to benefit the trader. Barclays’ traders coordinated requests for the submissions of their own and other banks (named only as A, B, and C) to be adjusted up or down in order to benefit their respective positions. Barclays’ management decided to adjust submissions downward to avoid the negative publicity it was getting for consistently being higher than the other banks (which the media was interpreting as a sign of weakness).

21


Other investigations have also yielded results, though not as detailed.

UBS granted leniency for violations regarding Yen Libor. RBS trader recently revealed messages showing that traders discussed manipulating Libor submissions with other banks. However, these appear to be trader-driven conspiracies.

Investigations ongoing in at least the United States, Britain, Switzerland, Japan, Canada, the European Union, and Singapore.

22

The Banks’ Response to the Evidence

Banks argue that statistical evidence only shows parallel behavior, not a conspiracy.

But the consistency of departure from historical norms is uncanny.

But one study found “bunching” of banks’ submissions.

While parallel behavior may not alone prove a conspiracy, surely suggestive of one.

23

The Banks’ Response to the Evidence

Banks note that investigatory facts relate primarily to collusion among traders to move Libor up or down based on daily need.

Banks argue trader-driven collusion is: (a) isolated, and (b) irrelevant to an alleged conspiracy to consistently suppress Libor.

But findings still show willingness to collude.

But findings still show susceptibility of this market to cartel-like behavior.

But carving collusion into sub-parts is arguably improper at the motion to dismiss stage.

24

Conclusion as to Pleading Collusion

While neither alone conclusive, combination of

statistics and investigatory facts may be

sufficient at the pleading stage.

Even if the current complaints are vulnerable,

investigations are ongoing across the globe.

Future revelations seem likely, which will allow

for even stronger complaints.

25

Standing and “Netting”

Banks argue only those actually harmed on a “net” basis can sue.

A lender on a floating-rate loan was harmed because it received less in interest payments than it “should” have. But the borrower benefitted.

If an entity borrowed more than it lent out on Libor-referencing notes, it overall benefitted from Libor being suppressed.

If an investor has a floating interest-rate exposure, it may enter into another contract (interest rate swap) where in it agrees to make payments on a fixed basis in exchange for a floating return.

To grossly oversimplify, cash coming in on the rate swap could match cash going out on floating note, regardless of what Libor is. Thus, on net basis, no harm.

26

Standing and “Netting”

Law may not allow “windfall” of keeping benefit of “low Libor” while suing to recover damages from same “low Libor.”

Thus, courts may only allow suit by those damaged on a “net” basis. This may be problem for certification of large class actions.

In abundance of caution, individual investors should analyze portfolios on a “net” basis.

Absent veil-piercing situations, unlikely to be done enterprise-wide; each separate legal entity should be viewed on its own.

Absent unusual situations, “netting” will likely be applied across different types of Libor-referencing investments (notes, swaps, etc.), not just those plaintiff decided to sue on.

Burden of proof unclear, but plaintiffs may have initial burden of showing some non-zero damage even on a net-basis.

27

Other Defenses Asserted

Banks argue that Libor manipulation is not a

“restraint of trade.”

The impact Libor had on the financial world is beyond dispute.

Libor fixes the price for trillions in financial instruments; price fixing is a per se violation.

28

Other Defenses Asserted

Banks argue that only those investments directly purchased from the panel bank are actionable.

The banks cite to cases dealing with ability of end-users to sue for violations made early in a long distribution chain.

Plaintiffs argue that the rationales behind the “direct purchaser” rule are inapplicable here.

Unlike in a chain-of-distribution situation, no risk of duplicate recovery. Unlike in a chain-of-distribution situation, damages measurement is the same regardless of who the contractual counterparty was.

29

Antitrust Statute of Limitations

Under American Pipe, class members’ claims are deemed to have been brought at the time the class complaint was filed.

The current class-action complaints cover many, but not all, federal antitrust claims. For example:

The Baltimore antitrust class action only involves investments directly involving a panel bank. The Gelboim antitrust class action only covers “securities.” Most state laws have not yet been asserted on a class-action basis.

30

Antitrust Statute of Limitations

As to claims not part of class actions, four-year period puts federal claims at risk. (State laws vary.)

Banks argue that if statistical studies adequately state a claim now, those same studies—derived from long-available data—should have been done years ago.

But argument works the other way. If the banks are correct that the studies are insufficient even now on the merits, they should not be sufficient to start the clock, either. Clock should only fairly begin when other data became available. But banks repeatedly denied any manipulation—a factor for “fraudulent concealment.” But even regulators are only now understanding the scope of the manipulation.

31

What’s Next?

First wave of actions—largely class actions—have had motions to dismiss fully briefed.

Only one large individual investor action (Charles Schwab), but numerous other large investors closely monitoring these developments.

Floodgates likely to open: Following any positive developments on the pending motions to dismiss; Following any further revelations from investigations; or Once a critical mass of large investors file in own name.

32

What’s Next?

Interested investors should gather details on their Libor-impacted investments.

Analyze if case worthwhile based on “net” damage of “too low” Libor.

Determine if have concentration of panel bank-investments—tolling agreements? What type of investments are they? Subject to securities laws? Commodity Exchange Act? RICO laws? May drive what type of claims to be pursued (and thus, what statutes of limitation to be concerned about). What jurisdiction(s)’ laws will govern the claims? May change statute of limitations analysis. Are the claims in the class actions? If so, may be able to wait. If not, may have statute of limitations issues that will need to be addressed.

33

October 23, 2012 © 2012 Labaton Sucharow LLP. All rights reserved.

LIBOR Manipulation Litigation:

Latest Trends and Developments

Pursuing and Defending Individual and Class Action LIBOR-related Actions

Presented by Thomas A. Dubbs

[email protected]

212-907-0871

35 © 2012 Labaton Sucharow LLP. All rights reserved.

Forms of LIBOR Manipulation

• From 2005 to 2007, swaps traders would ask LIBOR-panel bank employees to submit rates that would benefit the traders—instead of the rates the bank would actually pay to borrow money

– could take the form of artificial inflation or suppression

• E.g., inflation enabled a trader that exchanged a fixed interest rate payment for a floating interest rate payment to profit/lock in a favorable rate

• E.g., suppression enabled a trader that exchanged a floating interest rate payment for a fixed interest rate payment to profit/lock in a favorable rate

– See Behind the Libor Scandal, N.Y. Times, July 10, 2012, available at http://www.nytimes.com/interactive/2012/07/10/business/dealbook/behind-the-libor-scandal.html.


Forms of LIBOR Manipulation (cont’d)

• During the financial crisis, LIBOR-panel banks would submit artificially depressed rates to deflect concerns about their financial health

– E.g., suppression enabled a bank (known to be a liquidity and default risk to other LIBOR-panel banks) to appear creditworthy to the market by submitting LIBOR in line with other banks’ rates and that reflected low borrowing costs

– See id.


Factual Landscape: Timeline

• March 2011: Reports circulate that U.S. regulators (SEC, DOJ) are probing Bank of America, Citibank, and UBS for LIBOR manipulation during the financial crisis

– See, e.g., David Enrich, Carrick Mollenkamp, & Jean Eaglesham, U.S. Libor Probe Includes BofA, Citi, UBS, Wall St. J., Mar. 18, 2011.

• Summer 2011: UBS becomes first bank to admit to LIBOR manipulation conspiracy

– turned itself in to DOJ before competitors to gain leniency/conditional immunity under the DOJ’s Corporate Leniency Policy

• See Dept. of Justice, Antitrust Division Corporate Leniency Policy issued Aug. 10, 1993, available at http://www.justice.gov/atr/public/guidelines/0091.htm.

– negotiated similar arrangement with Swiss Competition Commission

• See Lindsay Fortado, UBS Says Swiss Regulator Granted Immunity in Libor Investigation, Bloomberg Businessweek, Feb. 7, 2012, available at http://www.businessweek.com/ news/2012-02-07/ubs-says-swiss-regulator-granted-immunity-in-libor-investigation.html.

continued . . .


Factual Landscape: Timeline (cont’d)

• UBS Conditional Immunity (cont’d)

– admitted to manipulating LIBOR and Euroyen TIBOR

• See Form 6-K filed July 26, 2011.

– named the following co-conspirators for Yen LIBOR manipulation: HSBC, RBS, Deutsche Bank, JPMorgan, and Citigroup, and brokers ICAP and RP Martin

• See Lindsay Fortado, Liam Vaughan, & Joshua Gallu, UBS Turning Whistleblower in Libor Probe Pressures Rivals, Bloomberg, Feb. 21, 2012, available at http://www.bloomberg.com/ news/2012-02-21/ubs-turning-whistleblower-in-libor-probe-pressures-rivals.html.



• June 2012: Barclays agrees to pay a $453 million fine to settle accusations by U.S. and U.K. regulators (DOJ, CFTC, and FSA) regarding LIBOR manipulation

• Barclays acknowledges accuracy of DOJ’s Statement of Facts:

– Barclays submitted inappropriately low LIBOR, Euribor, USD Libor, and Yen LIBOR figures beginning at least as early as 2005 and through 2009

• See Appendix A to Non-prosecution Agreement between DOJ, Criminal Div., Fraud Section, and Barclays Bank PLC dated June 26, 2012 (“Appendix A”), ¶¶ 11, 21, 23.

– In setting LIBOR, Barclays improperly took into account requests made by in-house and fellow panel members’ interest rate derivatives traders, who were motivated by profit and sought to benefit bank trading positions

• Statement of Facts includes text of incriminating trader e-mails

continued . . .



• Barclays acknowledges DOJ Statement of Facts (cont’d)

– In setting LIBOR, Barclays also improperly took into account media concerns about liquidity

– Certain members of Barclay’s management, including senior managers in the treasury department and managers of the money markets desk, directed manipulation of USD LIBOR

• See Appendix A, ¶¶ 36-41.

• Barclays was granted partial conditional leniency by authorities



• Canada Competition Bureau Investigation

– Probe spans from 2007 to mid-2010 and focuses on Yen LIBOR

– Investigation involves 10 banks, including JPMorgan, UBS, Citibank, HSBC, Deutsche Bank, and RBS

– May 2011 filing sought production of records pursuant to Sections 11(1)(b) and 11(2) of the Competition Act, R.S.C. 1985, c. C-34 (Can.), as amended

– UBS and Citigroup are believed to be aiding Canadian authorities

• See Ben Protess, Azam Ahmed, & Ian Austen, R.B.S. Fighting Bid for Data in Rate Case, N.Y. Times DealBook, July 16, 2012, available at http://dealbook.nytimes.com/2012/07/16/ royal-bank-of-scotland-fighting-bid-for-data-in-libor-case/.



• Canada Competition Bureau Investigation (cont’d)

– RBS is refusing to share potentially incriminating documents despite an order from the Ontario Superior Court of Justice in Ottawa

• claims that sharing the documents would amount to an “unreasonable search and seizure” and violate its “privilege against self-incrimination” Id.

– Id.

• obtained an interim stay in February 2012

– See Andrew Mayeda, RBS Fair Game for Libor Probe Canadian Regulator Claims, Bloomberg, June 23, 2012, available at http://www.businessweek.com/news/2012-06-23/rbs-fair-game-for-libor-probe-canadian-regulator-claims.



• RBS is expected to enter into a settlement similar to that of Barclays in Q4 2012

– See Matt Scuffham & Sarah White, RBS Closing in on Rate-Rigging Settlement: Sources,

Reuters, Aug. 24, 2012, available at http://www.reuters.com/article/2012/08/24/us-libor-rbs-

settlement-idUSBRE87N0PS20120824.

• LIBOR manipulation flourished at RBS during the financial crisis because RBS only established rate-setting guidelines in June 2011

– See Liam Vaughan, Gavin Finch, & Andrea Tan, RBS Managers Said to Condone Manipulation of Libor Rates, Bloomberg, Sept. 25, 2012, available at http://www.bloomberg.com/news/2012-09-24/rbs-managers-said-to-condone-manipulation-of-libor-rates.html.

• Money-market traders responsible for RBS’ daily LIBOR submissions shared the same desk as the derivative traders whose profits rose and fell in connection with LIBOR

– See id.



• Regulatory actions proceeding in Japan, Canada, and Singapore

– See Glenn Schorr, LIBOR Fixing Scandal Hits Full Throttle, LIBORgate Brings Further Headwinds, Nomura Equity Research, July 12, 2012.

– Japanese action:

• includes Citibank Global Markets Japan and UBS

• probing TIBOR and Yen LIBOR submissions

– Canadian action:

• includes HSBC, RBS, Deutsche Bank, JPMorgan, and Citibank

• documents were requested on May 18, 2011

• probing Yen LIBOR submissions

– Singaporean action:

• wrongful termination suit by trader forced out for "improperly seeking to influence" the setting of LIBOR when RBS condoned the practice

• includes RBS’ Global Banking and Markets Division

• probing LIBOR submissions

• Monetary Authority of Singapore is also probing whether SIBOR was rigged

• Numerous investigations, including: U.K. Serious Frauds Office; AGs from Connecticut, Florida, Massachusetts, and New York; CFTC; FBI


Litigation Landscape

Antitrust Cases Consolidated Under:

In re LIBOR-Based Financial Instruments Antitrust Litigation, No. 11-MD-2262 (S.D.N.Y.) (Buchwald, J.)

Types of Plaintiffs in Consolidated Suit:

Over-the-Counter Interest-Rate Swap

Plaintiffs

Exchange-based Plaintiffs

Bondholder Plaintiffs

3 Charles Schwab Entities

Status: Motions to dismiss were fully briefed as of September 27, 2012.


Litigation Landscape (cont’d)

• Over-the-Counter Plaintiffs’ Case

– Class Action

– Class Definition: All persons or entities that purchased in the United States, directly from a

Defendant, a financial instrument that paid interest indexed to LIBOR any time during the period

August 2007 through May 2010.

– Lead Plaintiff: Mayor and City Council of Baltimore

– Claims: Sherman Act § 1; Clayton Act § 4; unjust enrichment & restitution.

– Allegations: Plaintiffs allege that defendant banks understated their borrowing costs (LIBOR) to

make themselves look financially healthier, and in doing so, paid lower interest rates to clients and

counterparties from August 2007 to May 2010.

• Plaintiffs manage public funds and retirement funds for their respective cities and purchased

hundreds of millions of dollars in interest rate swaps in which the rate of return was tied to

LIBOR and claim to have been harmed as a result.



Securities

• Exchange-Based Plaintiffs’ Case

– Class Action

– Class Definition: All persons, corporations, and other legal entities that transacted in Eurodollar

futures and options on Eurodollar futures on exchanges such as the CME between August 2007

and May 2010, and were harmed by Defendants’ manipulation of LIBOR.

– Lead Plaintiff: Metzler Investment GMBH

– Claims: Commodity Exchange Act § 1 et seq.; Commodity Exchange Act (vicarious liability);

Commodity Exchange Act § 22 (aiding and abetting); Sherman Act § 1;

restitution/disgorgement/unjust enrichment.

– Allegations: Plaintiffs allege that defendant banks manipulated LIBOR rates during the financial

crisis to present themselves as being economically healthier than they were, as well as to allow

them to pay lower interest rates on LIBOR-based financial instruments, such as Eurodollar futures.

• Plaintiffs manage investment funds internationally, trading on-exchange products tied to LIBOR

(e.g., Eurodollar futures) and claim to have been harmed as a result.



• Bondholder Plaintiffs’ Case

– Class Action

– Class Definition: Owners (including beneficially in “street name”) of any USD-denominated debt

security: (a) that was assigned a unique identification number by the CUSIP system; (b) on which

interest was payable at any time between August 2007 and May 2010; and (c) where that interest

was payable at a rate expressly linked to the USD LIBOR rate.

– Lead Plaintiff: Ellen Gelboim & Linda Zacher

– Claims: Sherman Act § 1; Clayton Act § 4.

– Allegations: Plaintiffs suffered damages by, inter alia, receiving manipulated and artificially

depressed amounts of interest on LIBOR-based Debt Securities they owned during the Class

Period.



Individual Cases

• Charles Schwab Cases

– Individual Actions consolidated into In re LIBOR

– Claims: Sherman Act § 1; RICO; Cartwright Act, Cal. Bus. & Prof. Code §§ 16720 et seq.;

interference with economic advantage (Cal. law); breach of implied covenant of good faith (Cal.

law); unjust enrichment (Cal. law).

– Allegations: Plaintiffs allege that defendant banks understated their borrowing costs (LIBOR) to

make themselves look financially healthier and in doing so, paid lower interest rates to clients and

counterparties from August 2007 to May 2010. During the Relevant Period, the Charles Schwab

Entities acquired billions of dollars’ worth of LIBOR-based financial instruments from Defendants

and other issuers, which paid artificially low returns to the Charles Schwab Entities due to

Defendants’ suppression of LIBOR.

• Plaintiffs manage various fixed income, bond funds which purchased or held LIBOR-based

financial instruments during the Relevant Period, and claim to have been harmed as a result.



• Cases Related to But Not Consolidated into In re LIBOR:

– Community Bank & Trust v. Bank of America Corp., No. 12-cv-4205 (S.D.N.Y. filed May 25, 2012) – class action

– Berkshire Bank v. Bank of America Corp., No. 12-cv-5723 (S.D.N.Y. filed July 25, 2012) – class action

– 33-35 Green Pond Road Associates, LLC v. Bank of America Corp., No. 12-cv-5822 (S.D.N.Y. filed July 30, 2012) – class action

– Lieberman v. Credit Suisse Group AG, No. 12-cv-6056 (S.D.N.Y. filed Aug. 8, 2012) – class action

– Courtyard at Amwell II, LLC v. Bank of America Corp., No. 12-cv-6693 (S.D.N.Y. filed Sept. 4, 2012) – class action

– Adams v. Bank of America Corp.,

No. 12-cv-7461 (S.D.N.Y. filed Oct. 4, 2012) – class action

Status: These cases have been related to In re LIBOR but have been stayed pending the outcome of the motions to dismiss pursuant to a memorandum and order dated August 14, 2012. See In re LIBOR, Dkt No. 205.



• Financial instruments covered by cases related to but not consolidated into In re LIBOR:

– Loans held by community banks with interest rates tied to USD LIBOR

• Community Bank & Trust

– Loans held by NY-based banks paying interest at rates tied to USD LIBOR

• Berkshire Bank

– USD LIBOR-based derivatives purchased from non-defendant commercial banks and insurance companies in the United States

• 33-35 Green Pond Road Associates

• Courtyard at Amwell II

– Preferred equity securities at which dividends were payable at a rate linked to USD LIBOR

• Lieberman

– Loan transactions involving borrowers and interest rates indexed to LIBOR, principally real estate loans resulting in adjustable-rate mortgages

• Adams

• LIBOR inflation theory



• Berkshire Bank Action

– Class Action related to In re LIBOR

– Class Definition: All lending institutions headquartered in the State of New York or with a

majority of their operations in the State of New York, that originated, purchased outright, or

purchased a participation interest in, loans paying interest at rates tied to USD LIBOR, the

interest rate of which adjusted at any time between August 1, 2007 and May 31, 2010, inclusive.

– Claims: Fraud; Unjust Enrichment/Disgorgement

– Allegations: Plaintiff alleges that Defendants made repeated intentional false representations

about their borrowing costs to the British Bankers’ Association, which resulted in the artificial

suppression of USD LIBOR rates during the Class Period, and caused significant damages to

Plaintiff and the Class.

• Plaintiff is a banking corporation chartered by the State of New York that, as part of its normal

business activities, originated and purchased, either outright or as a participation interest,

loans tied to USD LIBOR, and was injured thereby.



• 33-35 Green Pond Associates Action


– Class Definition: All persons or entities who purchased LIBOR-based Derivatives

from non-Defendant commercial banks and insurance companies in the United

States based directly on the rates set by Defendants, from at least as early as

August 1, 2007 through such time as the effects of Defendants’ illegal conduct

ceased.

– Claims: Sherman Act § 1.

– Allegations: Plaintiff alleges that Defendants devised and executed a scheme to

manipulate LIBOR in order to benefit their financial positions as counterparties to

LIBOR-based derivatives.



• Lieberman Action


– Class Definition: Owners of a Preferred Equity Security at which dividends were payable at a

rate linked to USD LIBOR rate during the Class Period—November 2005 until May 2010.

• Includes 24 state-specific sub-classes for Alabama, Alaska, Arizona, California, District of

Columbia, Iowa, Kansas, Maine, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New

Mexico, New York, North Carolina, North Dakota, Oregon, South Dakota, Utah, Vermont,

West Virginia, Wisconsin, and Wyoming.

– Claims: Violation of state antitrust laws; unjust enrichment.

– Allegations: Plaintiff alleges that Defendants colluded to artificially depress LIBOR: (1) so their

own traders could maximize their positions on various financial instruments dependent on LIBOR;

and (2) to give the appearance of financial stability as the financial crisis unfolded.



• Gusinsky v. Barclays PLC – Barclays U.S. Securities Fraud Class Action

– No. 12-cv-5329 (S.D.N.Y. filed July 10, 2012)

– Securities Class Action proceeding independently from In re LIBOR

– Class Definition: Purchasers of Barclays-sponsored ADRs on an American

securities exchange between July 10, 2007 and June 27, 2012, inclusive

– Only 3.6 percent of Barclays’ equity is traded via sponsored ADRs in the United

States

– Claims: Sections 10(b) and 20(a) of the Securities Exchange Act of 1934; SEC Rule

10b-5



• Barclays U.S. Securities Fraud Class Action (cont’d)

– Allegations: Plaintiff alleges that Barclays made false and misleading statements

regarding: (1) its compliance with laws and regulations; (2) its LIBOR submissions,

and by extension its financial condition; and (3) the sufficiency and use of its internal

controls.

– Defendants: (1) Barclays PLC; (2) Robert Diamond (CEO between January 1, 2011,

and July 3, 2012); and (3) Marcus Agius (Chairman of the Board of Directors)

– Status: Carpenters Pension Trust Fund of St. Louis and St. Clair Shores Police &

Fire Retirement System were appointed Lead Plaintiff on October 2, 2012. Amended

Complaint is due November 16, 2012.



• Galope v. Deutsche Bank Nat’l Trust Co.

– No. 12-cv-323 (C.D. Cal. filed Mar. 1, 2012)

– Individual Action

– Claims: Sherman Act § 1 (price fixing); Cal. Bus. & Prof. Code §§ 17200; Cal. False

Advertising Law; aiding and abetting (Cal. Bus. & Prof. Code); wrongful foreclosure;

breach of covenant of good faith and fair dealing; and fraud.

– Allegations: Plaintiff, who had a LIBOR interest-only adjustable-rate mortgage that

was placed in a mortgage-backed securitized trust, was allegedly harmed by LIBOR

manipulation by being forced to pay a higher interest rate than she would have paid

in the absence of the manipulation.

– Status: Dismissed (interest rates for loan were not affected by LIBOR) on October

11, 2012. Plaintiff appealed; opening appellate brief due March 25, 2013.


Potential U.K. Action

• Financial Services and Markets Act 2000 (the “FSMA”)

– Financial Services and Markets Act, 2000, c.8 (Eng.)

– Two potential statutory causes of action under the FSMA:

• Section 90

– Rough equivalent of Sections 11 and 12(a)(2) of the Securities Act of 1933

• Section 90A

– Rough equivalent of Section 10(b) of the Securities Exchange Act of 1934


Potential U.K. Action (cont’d)

• Neither Section 90 nor Section 90A has ever been used by claimants

• Shareholder action groups are reportedly planning to assert Section 90 claims in separate actions against two U.K. banks:

– RBS

• Based on alleged misstatements and omissions in an April 2008 rights issue prospectus that RBS issued in the months prior to the U.K. Government bailout of RBS

– Lloyds

• Based on alleged misstatements and omissions in a November 2008 prospectus issued by subsidiary HBOS, including the allegation that the prospectus failed to disclose that HBOS had received emergency funding from the Bank of England at the direction of the U.K. Government



• FSMA Section 90

– Makes any person who is responsible for a prospectus liable to compensate a person who has:

• acquired or contracted to acquire securities to which the prospectus applies; and

• suffered loss as a result of either:

– any untrue or misleading statement in the prospectus; or

– the omission from the prospectus of any matters required to be included.

– No reliance requirement

– Commentators are split, but the consensus view is that the potential claimants include after-market purchasers



• FSMA Section 90 (cont’d)

– Barclays raised about £4.5 billion ($8.85 billion) pursuant to an June 2008

offering that was subscribed to by existing shareholders, including a

number of leading institutional shareholders, and other investors

– Any Section 90 claim may have to be based on an omissions theory

• The prospectus for the share placing did not reference “LIBOR” or “EURIBOR”

• It is unclear whether the failure to disclose uncharged criminal conduct is actionable under Section 90




– Omissions

• Matters “required to be included” in a prospectus include, inter alia:

– The specific information required by the relevant listing rules or the FSA; and

– All information that investors and their advisers reasonably require, and

would reasonably expect, for the purposes of making an informed

assessment of the assets, liabilities, financial position, profits, losses,

and prospects of the issuer.




– Barclays also issued tens of billions of pounds sterling in debt securities throughout the relevant period pursuant to numerous prospectuses

• Those prospectuses provided that Barclays could issue both floating rate and inverse floating rate debt securities

– The interest rate for certain of the inverse floating rate debt securities is calculated by subtracting a reference rate “such as LIBOR” from a fixed rate

• Therefore, whether Barclays’ manipulation had a positive or negative effect on LIBOR, it may have had a direct adverse effect on certain purchasers of the debt securities

• Thus, those prospectuses arguably contain material misstatements




– Persons potentially liable include:

• Barclays;

• Each Barclays director at the time that the prospectus was submitted to the FSA;

• Any person who accepted, and was stated in the prospectus as accepting, responsibility for its contents; and

• Any other person who authorized its contents.

– See Regulation 6 of the FSMA Regulations 2001 (SI 2001/2956).



• FSMA Section 90A

– Section 90 does not cover misstatements or omissions in:

• An issuer’s periodic financial disclosures (i.e., annual and half-yearly reports and accounts); or

• So-called “ad hoc” disclosures that the issuer is required to issue by means of regulatory information service (i.e., earnings releases and interim reports)

– These are subject to the compensation regime in Section 90A



• FSMA Section 90A (cont’d)

– Only the issuer may be held liable under Section 90A

– Scienter standard

• The issuer is only liable if a person “discharging managerial responsibilities” relating to the publication at issue (i.e., a Barclays director)

– knew, or was reckless as to whether, the statement was untrue or misleading; or

– knew any omission to be dishonest concealment of a material fact.



• FSMA Section 90A (cont’d)

– Barclays’s financial statements during the relevant time period contained various statements concerning its valuation techniques incorporating LIBOR, including, for example:

• Barclays 2008 Annual Report, at 289.

– Arguably, such statements constitute half-truths, which are actionable under traditional U.K. prospectus liability law.

For certain product types, particularly credit related such as asset backed financial instruments, the discount rate is set at a spread to the standard discount (LIBOR) rates. In these cases, in addition to standard discount rates, the spread is a significant input to the valuation. For some assets this spread data can be unobservable.



• Other potential causes of action under U.K. law

– Section 2(1) of the Misrepresentation Act 1967

• Statutory liability for pre-contractual negligent misrepresentations

– Common law causes of action

• Fraudulent misrepresentation or deceit

• Negligent misrepresentation

• Innocent misrepresentation (rescission)


Challenges to Bringing LIBOR Manipulation-related Suits

• Key Challenges:

(1) Identifying Exposure – Lack of consensus on loss calculation

(2) Potential Defendants – Largely located abroad

(3) Jurisdictional Concerns – Morrison implications; varying class action procedures in foreign jurisdictions

(4) Statute of Limitations Considerations – LIBOR manipulation dates back to 2005


Challenges to Bringing LIBOR Manipulation-related Suits (cont’d)

(1) Identifying Exposure

– Investors and market participants may have been harmed due to LIBOR manipulation by:

• Purchasing common stock or ADRs of conspirator banks during the period when the Company was engaged in LIBOR manipulation;

• Losing money on swap transactions with returns tied to LIBOR;

• Holding deposits or securities designed to pay a LIBOR-linked return, such as mortgage- or asset-backed securities, when LIBOR was artificially suppressed;

• Selling LIBOR-linked securities, the market price of which was artificially suppressed due to LIBOR suppression;

• Holding or paying a financial instrument that included a LIBOR-linked “trigger” that was activated when LIBOR moved beyond a pre-determined range; or

• Paying artificially inflated charges to terminate fixed-for-floating interest rate swap agreements, currency transactions, or other types of financial instruments entered into with LIBOR-submitting banks.



(1) Identifying Exposure (cont’d)

– Not all financial instruments affected by LIBOR manipulation may qualify as securities

• Securities and Exchange Acts include “security-based swaps” within the definition of “security”

– See 15 U.S.C.A. §§ 77b(a)(1), 78c(a)(10)

– A “security-based swap” is:

– 15 U.S.C.A. § 78c(a)(68)(A)

any agreement, contract, or transaction that—(i) is a swap, as that term is defined under section 1a of the Commodity Exchange Act [the CEA], ... and (ii) is based on—(I) an index that is a narrow-based security index, including any interest therein or on the value thereof; (II) a single security or loan, including any interest therein or on the value thereof; or (III) the occurrence, nonoccurrence, or extent of the occurrence of an event relating to a single issuer of a security or the issuers of securities in a narrow-based security index, provided that such event directly affects the financial statements, financial condition, or financial obligations of the issuer.




– Financial Instruments that Qualify as Securities (cont’d)

• Credit-default swaps – included in the definition of “swap” under the CEA

– 7 U.S.C.A. § 1a(47)(A)(iii)(XV)

• Interest-rate swaps – included in the definition of “swap” under the CEA

– See 7 U.S.C.A. § 1a(47)(A)(iii)(I)




– Financial Instruments that Qualify as Securities (cont’d)

• Loan participation – rebuttable presumption that loan participation is a security

– “Family resemblance test” allows issuer to rebut the presumption that a note is a security if it can show that the note “‘bear[s] a strong family resemblance’ to an item on the judicially crafted list of exceptions”

– Factors: (1) the motivations that would prompt a reasonable buyer and seller to enter into the transaction; (2) the plan of distribution of the instrument; (3) the reasonable expectations of the investing public; and (4) whether some factor, such as the existence of another regulatory scheme, significantly reduces the risk of the instrument, thereby rendering application of the securities laws unnecessary.

• Reves v. Ernst & Young, 494 U.S. 56, 63-67 (1990)

– “Risk capital test” considers: (1) the time provided for repayment of the loan; (2) whether the loan was collateralized; (3) the form of the obligation; (4) the circumstances of issuance; (5) the relationship between the amount borrowed and the size of the borrower’s business; and (6) the contemplated use of the loan proceeds.

• Deauvill Sav. & Loan Ass’n v. Westwood Sav. & Loan Ass’n, 648 F. Supp. 513, 515 (C.D. Cal. 1986)




– Several different approaches to determining losses

– All seek to compare reported LIBOR with some form of baseline rate reflecting where LIBOR should have been, given other kinds of data about credit risk (e.g., CDS rates).

• See, e.g., Connan Snider & Thomas Youle, Does the LIBOR Reflect Banks’ Borrowing Costs?, Apr. 2, 2010, http://www.econ.umn.edu/~youle001/ libor_4_01_10.pdf.

– Resulting estimates for the amount by which LIBOR was manipulated vary

• Between 15 and 75 basis points for the 2007 to 2008 period




• For example, a comparison of Citigroup’s LIBOR submissions with its CDS rate, which indicates risk, reveals that on average the bank understated its borrowing costs by 0.12 percentage points from August 2007 to August 2008

– See Stephen Gandel, Barclays the Biggest Libor Liar? No, That May Have Been Citi, CNN Money, July 20, 2012.

– Other U.S. LIBOR panel banks show slightly smaller differentials

• Of all LIBOR-panel banks, the Royal Bank of Canada had the largest spread between what its LIBOR rate should have been and what it reported. Id.

Source: Nomura Equity Research

Source: Nomura Equity Research




– “Netting” or Offset Issue

• Parties often stood on both sides of LIBOR: artificially depressed LIBOR may have

caused them to lose money on some transactions, but profit on others

• To what extent must LIBOR-related losses be offset by LIBOR-related gains?

• Jurisprudence suggests two broad approaches:

– Compensation model – compensates injured party only for actual injury/loss and

endorses offsetting

• See, e.g., 15 U.S.C.A. § 78bb(a)(1) (“No person . . . shall recover . . . a total

amount in excess of the actual damages to that person . . . .”).

– Deterrence model – seeks to deter improper conduct; uses transaction-based method

• See, e.g., In re Cigna Corp. Sec. Litig., 459 F. Supp. 2d 338, 351 (E.D. Pa. 2006)

(“[A] frequently cited justification for adopting a transaction-based methodology is

that aggregation (i.e., offsetting) undermines a major goal of the securities laws—

namely, deterrence of fraud.”).




– Offset Issue (cont’d)

• Distinct offsetting approaches taken in different areas of law:

– Antitrust approach – generally offset injury by any benefit attributable to collusive

agreement

• E.g., Merger Violations: See Kottaras v. Whole Foods Market, Inc., 281 F.R.D. 16, 24 (D.D.C. 2012) (rejecting plaintiff’s proposed method of demonstrating harm, which would not have offset the benefits of price decreases resulting from a merger against price increases allegedly caused by anti-competitive conduct).

• E.g., Tying Violations – “Package Approach” (offsetting overcharge on tied product by any price savings for the tying product): See Sheet Metal Workers Nat’l Health Fund v. Amgen Inc., No. 07-cv-5295, 2008 WL 3833577, at *6 (D.N.J. Aug. 13, 2008) (finding that plaintiff failed to plead an injury because it did not demonstrate that the defendant’s “tying arrangement had caused it to face a significant threat of paying more for [the tied products] as a bundle than it would pay for the products individually absent the tie”).

• Note that some cases endorse the “tied-product approach,” pursuant to which damages reflect the difference between the price paid for the tied product and the price for which the tied product could have been purchased on the open market and not considering coincident savings, if any, on the tying product. See Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1054 (5th Cir. 1982).




• Distinct offsetting approaches taken in different areas of law (cont’d):

– Securities fraud approach – Courts are split between automatically

offsetting fraud-related gains or considering circumstances on a case-

by-case basis.

• E.g., Offsetting Approach: See Lawrence E. Jaffe Pension Plan v.

Household Int’l, Inc., 756 F. Supp. 2d 928, 935 (N.D. Ill. 2010) (limiting out-

of-pocket damages to actual damages “such that plaintiffs’ losses must be

netted against any of their profits attributable to the same fraud”).

• E.g., Case-by-Case Approach: See Rocker Mgmt., LLC v. Lernout &

Hauspie Speech Prods., N.V., No. 00-cv-5965, 2007 WL 2814653, at *14-15

(D.N.J. Sept. 24, 2007) (noting that “whether the netting or transactional

approach is utilized depends on the circumstances,” and applying the netting

approach to short transactions).




• Even if netting applies, courts are likely to respect corporate form and not pierce the

corporate veil to perform an enterprise-wide offset of LIBOR gains against losses

– See Minpeco, S.A. v. Hunt (Minpeco II), 686 F. Supp. 427, 429-31 (S.D.N.Y. 1988)

(rejecting argument that company owned by Peruvian government was required to

offset losses based on gains received by government through other controlled

entities, citing “presumption in favor of honoring the separate legal status of a

government corporation [from its government owner]”).

– See Apex Oil Co. v. DiMauro, 744 F. Supp. 53, 56-58 (S.D.N.Y. 1990) (declining to

collectively offset gains and losses of three independent subsidiaries owned by one

holding company and only offsetting gains and losses within each entity because

holding company did not exercise day-to-day control over the subsidiaries).

– See also Janus Capital Group, Inc. v. First Derivative Traders, 131 S. Ct. 2296, 2303-

04 (2011) (holding that “the maker of a statement [under SEC Rule 10b-5] is the entity

with authority over the content of the statement and whether and how to communicate

it,” and finding that only the mutual fund that made statements was liable for

misrepresentations therein where mutual fund and its investment adviser were distinct

corporate entities).



Bank Name Headquarters/Inc. Country Notes

Bank of America $ North Carolina/Delaware (USA)

Bank of Nova Scotia Canada/Canada Served on BBA panel in 2011

Bank of Tokyo-Mitsubishi UFJ Ltd. $ Japan/Japan

Barclays Bank plc $ England/England

BNP Paribas S.A. $ France/France Added in February 2011

Citibank NA $ New York/Delaware (USA)

Crédit Agricole CIB $ France/France Added in February 2011

Credit Suisse AG $ Switzerland/Switzerland

Deutsche Bank AG $ Germany/Germany

HBOS plc Scotland/United Kingdom Subsidiary of Lloyds since January 2009

(2) Potential Defendants (USD LIBOR)

“$” indicates banks currently serving on the USD LIBOR panel (as of May 2012). continued . . .



Bank Name Headquarters/Inc. Country Notes

HSBC $ United Kingdom/United Kingdom

JPMorgan Chase $ New York/Delaware (USA)

Lloyds Banking Group $ United Kingdom/Scotland

Rabobank $ Netherlands/Netherlands

Royal Bank of Canada $ Canada/Canada

Société Générale $ France/France Replaced HBOS in February 2009

Sumitomo Mitsui Banking Corporation $ Japan/Japan Added in February 2011

The Norinchukin Bank $ Japan/Japan

The Royal Bank of Scotland Group PLC $ United Kingdom/United Kingdom

UBS AG $ Switzerland/Switzerland

West LB AG Germany/Germany Resigned from BBA Panel in July 2011;

dissolved on June 30, 2012

“$” indicates banks currently serving on the USD LIBOR panel (as of May 2012). Source: http://www.bbalibor.com/panels



(3) Jurisdictional Issues

– Implications of Morrison v. National Australia Bank, 130 S. Ct. 2869 (2010)

• U.S. securities laws only cover transactions in securities listed on domestic exchanges, and domestic transactions in other securities

– Class action mechanisms differ abroad

• Opt-in participation:

– United Kingdom, Germany, and France require plaintiffs to “opt in” in order to participate

• Financing for Class Actions:

– Private litigation funders provide financial backing for litigation in exchange for a share of the recovery. Law firms overseas lack the resources necessary to finance class action litigation and contingent fees are prohibited.

• Cost-shifting provisions

– “Loser pays”

• Discovery obligations

– More burdensome



(4) Statute of Limitations Considerations

– U.S. regulators have entered into tolling agreements with some banks

• See Jean Eaglesham, Regulators Try to Beat Clock in Rate Probe, Wall St. J., Sept. 19,

2012.

– Conduct may still be ongoing

• See Floyd Norris, The Myth of Fixing the Libor, N.Y. Times, Sept. 27, 2012.

– Depending on claim, statutes of limitation may be an issue:

• New York Common Law Fraud (greater of 6 years from violation or 2 years from

discovery)

• New York Unjust Enrichment (6 years)

• Sherman Act § 1 (4 years, tolled until improper act is reasonably discoverable)

– Equitable tolling under American Pipe & Construction Co. v. Utah, 414 U.S. 538

(1974), may or may not be available