NEW YORK (AP) - Lawsuits against 16 of the world's largest banks alleging they colluded to manipulate the primary benchmark for global short-term interest rates have been reinstated by a federal appeals court that found Monday that a judge had rejected the litigation too quickly.
Saying it wasn't a close call, the 2nd U.S. Circuit Court of Appeals in Manhattan restored lawsuits seeking billions of dollars in damages brought by investors in financial instruments mostly issued by the banks. The financial instruments carried interest rates tied to the London Interbank Offered Rate known as LIBOR. LIBOR is used by banks to borrow from each other and affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
The lawsuits in Manhattan federal court had been dismissed by a judge who reasoned that the LIBOR-rate setting process was collaborative rather than competitive. The judge also found any manipulation of the rates did not cause investors anticompetitive harm.
But the appeals court said in a ruling written by Circuit Judge Dennis Jacobs that the lawsuits were dismissed at such an early stage that the plaintiffs did not yet have a chance to try to prove that the banks used LIBOR in setting rates for lending transactions. The 2nd Circuit said that and other questions could only be "properly analyzed" at a later stage in the litigation.
The three-judge panel said the claims of the plaintiffs had to be taken as true at this stage of the litigation and they had "plausibly alleged both antitrust violation and antitrust injury."
Robert F. Wise Jr., a lawyer for the banks, said it was too early to comment on the decision.
"It's still pretty fresh. We're still considering it," he said.
Michael Hausfeld, an attorney for the plaintiffs, called the decision "a major, long-awaited vindication of fundamental antitrust principles. It is also a roadmap for all other similar matters involving benchmark rate fixing."
Published: Wed, May 25, 2016
