Libor scandal that started in London because some of the largest banks of the world influenced to their benefit interbank reference interest, reached Alaska, writes Thomson Reuters. Brian Murray, a New York lawyer, has filed a lawsuit Wednesday on behalf of investors in Alaska, as well as those in Wyoming, North Dakota and nearly 20 other U.S. states that accused banks of “manipulating” the interbank rate. Libor is a reference rate for any financial instrument, from credit cards to contracts worth trillions of dollars.
So far, no investor in Alaska was included among the applicants and it is not known how many people in the country were affected by the Libor rate. The accusation arise in the context of loss suffered by investors from the reduced dividend to certain securities, as the banks have kept Libor artificially low. Murray is looking for customers in other states. So far he has collected signatures only from investors in the New York state. He expects investors from Alaska to subscribe to the group of applicants. “They found me. I sometimes ask myself how the people find me, but in the Internet world, anything is possible,” said Murray.
Lawyers have filed so far a lot of complaints on behalf of several investors in the hope that federal judges will approve a collective lawsuit in which applicants will be able to join resources. Claims against Libor have been in courts for 16 months. A new wave of many cases were filed in court after Barclays was fined $453 million in June by American and British authorities for the handling of London interbank rate. The list of lawsuits includes Citigroup Inc., Bank of America and a host of other major banks. Banks required dismissal of cases filed before the scandal broke on the ground that there is no evidence to that point that Libor rate was manipulated.
Three major cases were filed last year and include investors who hold securities linked to the Libor rate and purchased from banks, investors holding bonds related to Libor rate and those who used the euro-dollar futures transactions. Michael Hausfeld, from the law firm Hausfeld, is one of the first lawyers that started a Libor lawsuit a year ago on behalf of several investors. He said he expects a fierce competition between lawyers to take such collective cases in a Libor lawsuit.
The applicants will have to meet certain standards to be able to join forces in a class action lawsuit. On their success depends the banks’ losses estimated by some analysts to tens of billions of euros. If a class action lawsuit is not approved, those applicants will have to sue banks on their behalf, which few investors would afford.
According to Richard Rapp, a former manager at NERA Economic Consulting, consultant in antitrust cases, one Libor lawsuit would cost up to $10 million. The defendants will most likely attack the class eligibility arguing that they have little in common and that, for example, while some of the investors were negatively affected by the Libor rate in a given day, others were helped to win.
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