Judge OKs big banks’ settlement with eurodollar investors over LIBOR rigging

September 18, 2020.

A U.S. federal judge on Thursday approved an aggregate $187 million settlement agreement resolving an antitrust class action against seven of the world’s largest banks that claimed the banks colluded to misreport and manipulate LIBOR rates, harming eurodollar investors.

In the lawsuit, led by Germany-based , the plaintiffs alleged that between 2005 and 2010, , , , , , and conspired to misreport and manipulate LIBOR rates, artificially setting eurodollar futures contract prices.

Deutsche Bank agreed to pay the most into the settlement fund at $80 million, followed by Citigroup’s payment of $33.4 million. Barclays agreed to pay $19.98 million, HSBC agreed to pay $18.5 million, Bank of America and JPMorgan Chase each agreed to pay $15 million, and Societe Generale agreed to pay $5.13 million.

The settlement was preliminarily approved by the U.S. District Court for the Southern District of New York in March, and the judge gave final approval to the deal on Thursday. 

In agreeing to the settlement, the banks admitted no wrongdoing.

The plaintiffs’ class included all people and companies that traded eurodollar futures and options on eurodollar futures on exchanges between Jan. 1, 2003, and May 31, 2011. Six entities have opted out of the settlement: the ; Salix Capital; the city of Philadelphia; Prudential Investment Portfolios; Darby Financial Products; and .

LIBOR is currently in the process of being retired, with the interest rate benchmark set to be phased out by the end of 2021. Criminal investigations in the wake of the 2008 financial crisis found that banks were falsely inflating or deflating their rates depending on what would benefit them. Banks have been hit with civil lawsuits and criminal penalties all over the world as a result of this impropriety.

In 2017, the United Kingdom’s , which governs LIBOR, said it would discontinue the benchmark rate by the end of 2021, with firms required to transition to alternative rates prior to then. Earlier this year, the regulator said the coronavirus pandemic should not impact the LIBOR transition.