BofA, Barclays Win Narrowing of 27 Libor-Rigging Lawsuits

A U.S. judge threw out a raft of claims against banks accused by investors of manipulating the London interbank offered rate, or Libor, which they said led to losses on transactions tied to the benchmark.

U.S. District Judge Naomi Reice Buchwald in Manhattan ruled Tuesday that some claims were filed too late and that the court lacked jurisdiction over some defendants. She allowed local governments, hedge funds and other investors to pursue fraud claims. None of the cases was dismissed entirely.

Libor is a benchmark used to value more than $350 trillion of loans and securities globally. Bank of America Corp., Mitsubishi UFJ Financial Group Inc., Barclays Plc and Citigroup Inc. are among the banks accused in 27 lawsuits of rigging the rates for their benefit and at the expense of investors. Buchwald is overseeing all such cases in the U.S.

The investors alleged the banks reported rates below their true borrowing costs beginning in August 2007. As a result, investors and speculators in loans and securities with floating rates were harmed, they said.

In a series of earlier rulings, Buchwald ruled on claims by class-action plaintiffs and affiliates of Charles Schwab Corp., determining they were “wholly or substantially deficient.” The judge blocked the plaintiffs in those cases from suing under a civil racketeering statute and antitrust statutes that carry the possibility of triple damages.

Buchwald said traders in exchange-based securities and over-the-counter securities could pursue their claims.

27 Cases

The claimants in the 27 cases affected by Tuesday’s ruling are individuals and firms that sued on their own, rather than seeking to combine their suits with others in class actions. They include the cities of Houston and Philadelphia, Salix Capital Ltd., the National Credit Union Administration Board and the Regents of the University of California.

Global authorities have investigated allegations that more than a dozen banks altered submissions used to set benchmarks such as Libor to profit from bets on interest-rate derivatives or make the lenders’ finances appear healthier.

Former UBS Group AG and Citigroup Inc. trader Tom Hayes was found guilty by a London jury on Monday of eight counts of conspiracy for scheming to rig the yen Libor rate. Hayes, the first person to be tried on charges of manipulating the benchmark, was sentenced to 14 years in prison.

The case is In re Libor-Based Financial Instruments Antitrust Litigation, 1:11-md-02262, U.S. District Court, Southern District of New York (Manhattan).

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