LIBOR and ISDAfix Manipulation Claims

The firm is at the forefront of English litigation involving LIBOR manipulation and is well placed to deal with claims against banks arising out of banks’ conduct and the regulatory investigations in respect of both LIBOR and ISDAfix. The firm’s lawyers acted successfully in the first and leading civil legal claim in the English High Court brought by Guardian Care Homes (Graiseley Properties and others) against Barclays in which fraudulent LIBOR fixing was alleged. Barclays settled the case shortly before a full trial.

An article in The Telegraph on 7 April 2014 reported on the settlement of the Guardian Care Homes case.

The dispute had received significant media attention, with practically all of the Court’s interim decisions, including most significantly a Court of Appeal decision in November 2013 (click here to see our press release), going in Guardian Care’s favour. For more details on that case, please click here.

We know our way around these cases to an extent that few other law firms can claim to. We have acted in claims which included a LIBOR manipulation allegation against almost all of the major UK banks. As well as Lloyds/Bank of Scotland, Barclays and RBS, such claims may also be advanced against HSBC, notwithstanding that there has been no formal FCA regulatory findings in respect of LIBOR made against that particular bank.

Further litigation in this field may include claims between market counterparties (such as claims by hedge funds and other investors against the BBA panel banks) as well as actions against individuals who were involved in or authorised the misconduct. Claims are likely to include: (a) allegations of misrepresentation and conspiracy; (b) allegations that investors have been mis-sold products based on LIBOR or ISDAfix without the selling bank revealing that the rate was being manipulated; (c) claims for lost interest from counterparties who were receiving interest based on LIBOR or ISDAfix, such as bond holders; (d) allegations that counterparties were prejudiced by being “knocked in” and “knocked out” of instruments at certain LIBOR or ISDAfix settings; and (e) competition law based claims.

In May 2015, Barclays became the first bank to be fined in relation to ISDAfix manipulation. The U.S. Commodity Futures Trading Commission (CFTC) imposed a fine of $115m in relation to manipulation between 2007 and 2012, and published several examples of Barclays’ conduct in seeking to manipulate ISDAfix to its financial advantage. ISDAfix rates are calculated, much like LIBOR, on the basis of a panel of submitting banks. ISDAfix is used primarily to set the prices for the fixed leg of interest rate swaps, and also to determine the value of other financial instruments, including corporate bonds, swaptions, and pricing of swaps subject to early termination.

Investigations continue in relation to other banks by both the CFTC and the FCA, and it may well be that further fines will follow.

Our specialist expertise includes a market leading banking and finance disputes practice with a track record of success in litigating against the major banks. We are experts in many of the complex financial instruments that are involved in these claims such as swaps, repos, swaptions and other derivatives and structured products where LIBOR or ISDAfix is a key component.