Big Banks Dodge Investor Suit Over Swiss Franc Libor Manipulation

(CN) – A federal judge dismissed an investor suit accusing Credit Suisse, RBS, JPMorgan Chase and other big banks of manipulating the Swiss franc Libor rate.

Collectively, Citigroup, JPMorgan Chase, Barclays, and the Royal Bank of Scotland have paid more than $7 billion to global regulators to settle charges related to their manipulation of the Libor rate, a benchmark interest rate that sets the rate at which banks lend British pounds to one another in London. Deutsche Bank was fined a record $2.5 billion.

Investors claimed the banks similarly conspired to fix the Swiss franc Libor rate, the rate at which banks may lend and borrow Swiss francs. By manipulating this rate, the banks were allegedly able to increase the bid-ask spread on derivatives traded in Swiss francs, which is the difference between the price banks can offer to buy Swiss franc-based derivatives and the price they can sell those securities.

Each of the defendant banks, UBS, RBS, Credit Suisse, JPMorgan Chase, and Deutsche Bank, sat on the British Bankers’ Association’s Libor panel, allowing them to coordinate their efforts to fix a rate beneficial to all of them.

JPMorgan agreed to settle claims against it for $22 million earlier this year.

But a federal judge dismissed the investors’ claims.

“Plaintiffs lack Article III standing to sue for the manipulation of bid-ask spreads because they have not alleged that they were injured by that manipulation,” U.S. District Judge Sidney H. Stein said.

While the court found that the investors made a plausible manipulation claim against RBS, Stein said that claim still could not move forward.

“Plaintiffs’ antitrust claim against RBS fails for lack of antitrust standing because plaintiffs did not transact in CHF LIBOR-based derivatives with RBS and therefore are not ‘efficient enforcers’ of the antitrust laws,” the 108-page opinion states.

The judge also dismissed the RICO allegations as “impermissible extraterritorial” because the conspiracy centered almost entirely in Europe.

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