Barclays Plc must disclose the identities of Libor traders and employees who made submissions to set interest rates, after a ruling in the first U.K. lawsuit related to manipulation of the London interbank offered rate.
Judge Julian Flaux in London said the bank must give the information on the workers to affiliates of Guardian Care Homes Ltd., which sued the bank over a loss-making interest-rate swap tied to Libor. London-based Barclays must also provide Guardian the e-mail communications of 42 employees, transcripts of phone conversations that refer to Libor, board minutes and documents from its treasury committee, Flaux ruled today.
Guardian sued over a swap that cost it about 12 million pounds ($19 million), saying Libor -- the baseline for about $300 trillion of contracts worldwide -- can’t be trusted. In June, Barclays was fined a record 290 million pounds after regulators found its investment bankers tried to manipulate the interest rate.
Barclays “spent 100 million pounds making sure no stone was left unturned” in what it disclosed to regulators about Libor, Tim Lord, Guardian’s lawyer, said at a hearing yesterday. Guardian wants access to the same information, he said. Barclays mentioned about 200 employees in its disclosure to regulators, the judge has said.
Flaux said he would keep the names from the public for 14 days to give individuals a chance to apply to the court for confidentiality. He will rule on any requests at an additional hearing.
“The directions given today are consistent with Barclays’ proposal to the court to manage disclosure in these proceedings in an effective and proportionate manner,” Barclays spokesman Jon Laycock said in an e-mail.
Barclays failed to have the Libor-fixing part of the suit thrown out on Oct. 29 when Flaux ruled it would have to answer accusations it profited from rigging Libor submissions.
Guardian, based in Wolverhampton, England, claims the Libor-based interest-rate swap it bought from Barclays isn’t valid because the bank knew, or should have known, the rate wasn’t accurate.
Barclays was previously denied permission to have the swap claim decided by British financial regulators instead of a judge.
Regulators worldwide are investigating allegations banks altered submissions used to set Libor in an effort to benefit traders, or to appear financially healthier than they were.
Libor is calculated by a poll carried out daily on behalf of the British Bankers’ Association that asks firms to estimate how much it would cost to borrow from each other for different periods and in different currencies. The BBA signaled in September it will give up oversight of the rate.
The disclosure of employee e-mails will strengthen other claims against Barclays brought by companies “that were mis-sold swaps and whose swaps payments were artificially increased by the downward manipulation of Libor,” said Carmen Leon, an attorney at Bracewell Law who isn’t involved in the Guardian case.
Dan Doctoroff, President and Chief Executive Officer of Bloomberg LP, has offered a measure dubbed the Bloomberg Interbank Offered Rate, or Blibor. It would use data from a variety of financial transactions in an effort to better reflect participating banks’ real cost of credit. Bloomberg LP is the parent of Bloomberg News.