Plaintiffs in the lawsuits include municipal governments and community banking institutions, which are suing Bank of America, JPMorgan Chase, Citigroup, HSBC Holdings, Deutsche Bank and UBS for their participation in the Libor rate-rigging scandal. Libor is a benchmark rate used to price more than $350 trillion of securities, according to Reuters.
Lawyers for the banks appeared before U.S. District Judge Naomi Reice Buchwald in Manhattan and urged the court to toss out the lawsuits, which cite violations of antitrust law and the Commodities Exchange Act.
Robert Wise, a lawyer for Bank of America, said that antitrust claims should be dismissed because there is no agreement between banks to maintain Libor at a low level, adding that banks did not restrict trade because Libor estimates their own borrowing costs, not product pricing.
“Libor is not something that is bought, or sold, or traded,” Wise said, Reuters reports. “It is simply a benchmark, an average.”
Bill Carmody, a lawyer representing the city of Baltimore and several other plaintiffs, said that Libor is a critical component of the price customers paid for interest-rate swaps and other Libor-related products.
Plaintiffs in the proposed class action lawsuits are potentially seeking billions in damages, saying that the banks began reporting low Libor rates in August 2007 to reduce borrowing costs and dispel concerns regarding their financial health. The plaintiffs maintain that Libor rate-rigging caused them to lose out on more lucrative returns on investments, according to Reuters.
Royal Bank of Scotland agreed recently to pay $612 million to U.K. and U.S. authorities over its participation in the scandal, UBS agreed last year to pay $1.5 billion in penalties and Barclays agreed to pay $453 million in to regulatory authorities.