http://www.dailymail.co.uk/news/article-2168473/Libor-scandal-ruin-banking-giants-US-lawyers-prepare-sue-financial-firms-hundreds-BILLIONS.html
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Scandal that could ruin banking giants: U.S. lawyers prepare to sue financial firms for hundreds of BILLIONS over global interest rate-fixing
By TOBY HARNDEN
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An American lawyer leading a class action suit in the United States has said that Barclays and other banks accused of rigging the Libor lending rate could be liable for hundreds of billions of dollars in damages.
‘There are thousands if not tens of thousands of entities that could possibly have a claim,’ said Michael Hausfeld, whose Washington-based firm Hausfeld LLP is co-leading the anti-trust class action case against 21 financial institutions.
His firm is receiving ‘inquiries on an hourly basis’ from potential plaintiffs seeking to join the 33 individuals and companies named in the class action, which was filed in New York in April.
Hausfeld LLP is also poised to launch legal actions in Asia and Europe, including the UK.
The New York suit states that the institutions named ‘and their co-conspirators engaged in a continuing agreement, understanding, or conspiracy in restraint of trade to artificially fix, maintain, suppress and stabilize Libor and thus the prices and rates of return on Libor-based derivatives sold by them’.In an interview with MailOnline, Hausfeld said: ‘The total aggregate [of transactions] would be approximately in the trillions of dollars. Small movements in the base’s points could produce millions if not tens of millions or billions of dollars in damage.’
He described the resignation of Barclays chief executive Bob Diamond on Tuesday as ‘a sign of the egregiousness of the conduct that occurred under his watch’. The record $451.4 million penalties imposed by regulators in Britain and the US last week represented ‘a game changer’, he said.
‘Basically it's foreclosing the participating banks from denying they engaged in any wrongful activity. It clearly is well demonstrated that there is almost a fanciful attitude on the part of the traders in terms of dealing with financial instruments and corrupting market integrity.’
In striking a deal with the US Department of Justice to admit wrongdoing, Barclays ensured it would not be prosecuted in return for cooperating with the ongoing criminal investigation into other banks and individual one-time Barclays employees, some 14 of whom are being scrutinised by the FBI.
‘It underscores the old adage that there may not be honour among thieves. Barclays had the ability to make a good deal for itself…Historically, those entities that exit early in criminal proceedings do better than those that linger,’ Hausfeld said.
Claims: Hausfeld said that Barclays and other banks accused of rigging the Libor lending rate could be liable for billions of dollars in damages (file photo)
The US Commodity Futures Trading Commission (CFTC) agency is understood to have started investigating Libor rates in May 2008. Concerns were then heightened during the global financial crisis the following autumn when the rate rose sharply due to stresses in the banking system and then dropped back suspiciously.
In spring 2010 the CFTC, which had by then been contacted by a whistleblower, brought in the UK’s Financial Services Authority (FSA) and presented it with powerful evidence of manipulation.
Since then, the investigation has pulled in nearly a dozen regulators and more than 20 banks and brokerage firms across three continents. With civil litigation in the US gathering steam, current and former US regulatory officials said that extraditions and criminal prosecutions were likely.
‘Extraditions are certainly a possibility if the Department of Justice [DoJ] isn’t done yet,’ a former US government regulatory official said. ‘The CFTC and SEC [Securities and Exchange Commission] are part of the civil authorities. They sue people, fine them and seize assets. The DoJ is criminal so they arrest people and throw them in jail.’
Suit: Michael Hausfeld (pictured) has a firm Hausfeld LLP that is co-leading the anti-trust class action case against 21 financial institutions
Professor William Black of the University of Missouri-Kansas City, author of ‘The Best Way to Rob a Bank is to Own One’, said US litigation could be the ‘biggest thing in the history of anti-trust by orders of magnitude’ and punitive damages ‘could bring down any British bank because Americans are big enough players’.
The scale of the alleged conspiracy to fix the rates raise the prospects of top Barclays officers and senior figures from other banks being tried in high-profile ‘white collar crime’ cases in which they are held up as personifications of the avaricious excesses of Wall Street and the City of London.
Black said that the US remained ‘tougher against elites than anybody else in the world’, noting the 1,000 felony convictions in the Savings & Loans scandal in the 1980s and 1990s and the 60 connected to Enron in the following decade.
Read more: http://www.dailymail.co.uk/news/article-2168473/Libor-scandal-ruin-banking-giants-US-lawyers-prepare-sue-financial-firms-hundreds-BILLIONS.html#ixzz1zedk1pep
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