In a 161-page decision issued Friday, Judge Buchwald dismissed a substantial portion of a series of cases accusing major banks of colluding to manipulate LIBOR. (Our prior post on the motions is here.) She first dismissed the antitrust claims for lack of antitrust injury:
As plaintiffs rightly acknowledged at oral argument, the process of setting LIBOR was never intended to be competitive. Tr. 12, 18. Rather, it was a cooperative endeavor wherein otherwise competing banks agreed to submit estimates of their borrowing costs to the BBA each day to facilitate the BBA’s calculation of an interest rate index. Thus, even if we were to credit plaintiffs’ allegations that defendants subverted this cooperative process by conspiring to submit artificial estimates instead of estimates made in good faith, it would not follow that plaintiffs have suffered antitrust injury. Plaintiffs’ injury would have resulted from defendants’ misrepresentation, not from harm to competition.
She dismissed the plaintiffs’ RICO claims under the “RICO amendment” to the PSLRA, which states that “no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of [RICO].” 18 U.S.C. § 1964(c). Those claims were also dismissed because the alleged RICO “enterprise” was located abroad.
Judge Buchwald allowed the plaintiffs to proceed with commodities manipulation claims, but held that articles about LIBOR manipulation published in 2008 put the plaintiffs on “inquiry notice” of their claims, rendering portions of the claims time-barred.
The opinion closed with Judge Buchwald explaining why it was not “incongruous” to substantially dismiss claims arising from the same conduct that has already caused thebanks to pay billions in government fines:
We recognize that it might be unexpected that we are dismissing a substantial portion of plaintiffs’ claims, given that several of the defendants here have already paid penalties to government regulatory agencies reaching into the billions of dollars. However, these results are not as incongruous as they might seem. Under the statutes invoked here, there are many requirements that private plaintiffs must satisfy, but which government agencies need not. The reason for these differing requirements is that the focuses of public enforcement and private enforcement, even of the same statutes, are not identical. The broad public interests behind the statutes invoked here, such as integrity of the markets and competition, are being addressed by ongoing governmental enforcement. While public enforcement is often supplemented by suits brought by private parties acting as “private attorneys general,” those private actions which seek damages and attorney’s fees must be examined closely to ensure that the plaintiffs who are suing are the ones properly entitled to recover and that the suit is, in fact, serving the public purposes of the laws being invoked. Therefore, although we are fully cognizant of the settlements that several of the defendants here have entered into with government regulators, we find that only some of the claims that plaintiffs have asserted may properly proceed.
Stay Connected