Solow Sues Citigroup, BofA Alleging Manipulation of LiborAndrew Harris
A Sheldon H. Solow-led New York realty company sued Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp. and several other banks for allegedly conspiring to manipulate the U.S. dollar Libor rate.
In a complaint filed today in federal court in Manhattan, 7 West 57th Street Realty Co. accused the banks of falsely reporting to the British Bankers Association interest rates at which the lenders themselves were able to borrow money day to day, causing the BBA to set an “artificial” London Interbank Offered Rate for trillions of dollars worth of transactions including bank loans and municipal bonds.
Claiming those acts resulted in Solow having to pay a judgment of more than $100 million, the real estate developer’s company is accusing the banks of racketeering conspiracy, violation of federal antitrust laws for which he’d be entitled to trebled damages and breach of a New York state law governing the free exercise of business and commerce.
Also named as defendants in the lawsuit are Royal Bank of Scotland Group Plc, which this month agreed to pay $612 million to U.S. and U.K. regulators to resolve Libor manipulation claims, Barclays Plc, the U.K.-based bank that in June agreed to pay 290 million pounds ($454 million), and UBS AG, which in December was fined 1.4 billion Swiss francs ($1.5 billion) by U.S., U.K. and Swiss regulators for its rate-rigging role.
Solow, who assigned his claims to 7 West according to the complaint, “purchased and subsequently pledged a portfolio of over $450 million worth of high-grade (typically insured and pre-funded) municipal bonds as collateral for Libor denominated loans.”
While Libor was artificially inflated, Citigroup declared Solow’s portfolio to be inadequate security, declared a default and seized and sold that collateral at “artificially low prices,” the real estate firm alleged, compelling Solow to pay a judgment in excess of $100 million last year.
The developer paid that money without then knowing of the banks’ alleged rate manipulation, according to the complaint.
Asked in a telephone interview today why his client assigned his claims to his business, Solow’s attorney Andrew Hayes replied, “We’re trying to keep the focus where it should be, which is Libor.”
Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan Chase, didn’t immediately respond to a telephone message seeking comment on the allegations.
Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, and Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the allegations.
The case is 7 West 57th Street Realty Co. LLC v. Citigroup Inc., 13-cv-0981, U.S. District Court, Southern District of New York (Manhattan).
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Apple Is Secretly Developing Its Own Screens for the First Time
- Hong Kong's Richest Woman Loses Half Her Wealth on Stock Plunge
- Snowstorm Looms as Spring Begins in Washington, Mid-Atlantic
- From a $126 Million Bonus to Jail: The Fall of a Star Trader
- Facebook on Defensive as Cambridge Case Exposes Data Flaw