UBS and Credit Suisse have already been fined millions to settle claims about the manipulation of Libor in the U.S. Now they face further demands from U.S. investors.
Companies facing claims in the U.S. tend to be forced to pay much higher fines and compensation than in other jurisdictions and therefore are keen to avoid such legal wrangles.
A group of European banks thus is fighting tool and nail against a claim filed by U.S. investors at a New York-based court for compensation due to the manipulation of the Libor.
Credit Suisse (CS) and UBS from Switzerland, together with Deutsche Bank, J.P. Morgan and Royal Bank of Scotland are being targeted by the group of investors, according to a report by «Law360» a U.S. news provider (behind paywall).
A Question of Jurisdiction
The claimants say that the banks conspired to manipulate the rate to generate a profit at the expense of U.S. investors. The Libor is being used to set prices of derivatives.
Target rates are being used to set prices for contracts worth some $500 trillion, according to estimates.
The lawyers of the accused companies say that the claim isn’t rightful because the proclaimed wrongdoing didn’t take place in the U.S., basing their interpretation on a precedent case.
Huge Fines Involved
The claimants by contrast argue that the damaged investors are based in the U.S. And the banks involved conspired with U.S. company J.P. Morgan exactly because they wanted to manipulate the prices of products traded in the U.S.
Several banks have had to pay damages for manipulating the rate in the past. The Swiss Competition Commission in 2016 ordered Swiss and foreign banks to pay fines amounting to 100 million Swiss francs and the commission is still investigating the case for further wrongdoing.
Five years ago, UBS was forced to pay a fine totaling 1.4 billion francs by U.S., U.K. and Swiss authorities to settle the claims.
