A preliminary $182M settlement has been reached in a benchmark rigging lawsuit between investors and banks Citigroup Inc. (C) and JPMorgan & Chase (JPM). Now, a federal judge must approve the deal, which would end claims accusing the two financial firms of manipulating the Euribor (Euro Interbank Offered Rate).
The benchmark interest rate is the average rate at which European banks are able to lend money to each other. It also is a key rate used for establishing certain loans.
It was just earlier this year that Euribor investors arrived at a $309M settlement over allegations that Barclays PLC (PLC), Deutsche Bank AG (DB), and HSBC Holdings Plc. (HSBC) had conspired to rig Euribor. Now, as part of this latest Euribor fraud settlement, JPMorgan and Citigroup have agreed to work with investors in their attempts to go after foreign defendant banks who were dropped from this lawsuit last year due to a lack of personal jurisdiction.
JPMorgan Settles Aussie Benchmark Rigging Case with Investors
This isn’t the only benchmark rigging case that JPMorgan has recently settled. In a different and unrelated investor fraud case, this one alleging manipulation of the Bank Bill Swap Reference Rate (BBSW), JPMorgan and the plaintiffs arrived at a $7M settlement. BBSW is the Australian short-term interest benchmark that is the equivalent of the London interbank offered rate.
Under the terms of the deal, both JPMorgan Chase & Co. and JPMorgan Chase Bank also have agreed to help the proposed class by sharing any evidence they might have that could help the plaintiffs go after other financial institutions that may have worked together to fix the price derivatives determined by BBSW.
The Aussie benchmark rigging case, brought in 2016, accuses brokers of banks of making hundreds of millions of dollars as they worked together to rig these prices so they could profit. Already, settlements have been reached with RBS NV, UBS (UBS), and BNP Paribas. Morgan Stanley (MS) is the remaining defendant in this Aussie benchmark lawsuit, which was brought by investor Richard Dennis.
A US district court judge dismissed charges brought against other banks named, including Deutsche Bank and Credit Suisse (CS) due to a lack of jurisdiction because they are considered foreign defendants. Several other institutional investor plaintiffs, including a number of FrontPoint funds and Sonterra Capital Master Fund Ltd., were found to lack the required standing to sue the banks due to the fact that they are now dissolved.
Libor Rigging Charges Lead to Convictions
Last month, in another benchmark rigging case, this one for criminal charges involving Libor, two ex-Deutsche Bank traders were convicted of wire fraud and conspiracy. They are ex-Deutsche Bank New York pool trading director Matthew Connolly and the bank’s former London money market and derivatives director Gavin Campbell Black.
Connolly reportedly instructed Deutsche Bank staffers to contact the bank’s Libor submitters and request that they submit fraudulent contributions that were in alignment with the financial interests of the bank and his traders instead of providing the actual costs of borrowing. Black, meantime, is accused of asking the bank’s cash traders to modify their submission rates in a manner that benefited his own derivative trading positions when turning in Deutsche Bank’s LIBOR rates.
According to prosecutors, the Libor submitters worked to grant the defendants’ Libor rigging-related requests. The convictions of the two men come more than three years after Deutsche Bank reached a deferred prosecution deal in the US over antitrust and wire fraud charges related to Libor rigging allegations.
Libor is the benchmark rate that is representative of how much banks can lend one another in the short-term. It also has been key in helping to establish different loans globally.
Our institutional investor fraud lawyers at Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) have worked with thousands of clients in recouping their losses. We work with institutional clients and high net worth individual investors throughout the US. Contact SSEK Law Firm today.