UK judge rejects UBS’ bid to throw out FDIC lawsuit over LIBOR rigging

July 27, 2020.

must face a lawsuit brought by a U.S. regulator in a U.K. court alleging the bank conspired with other financial institutions to manipulate the LIBOR in 2007, marking the latest in years of litigation against banks over claims of rigging the benchmark.

A U.K. judge on Monday rejected the bank’s motion for dismissal of the suit, lodged by the U.S. Corporation.

While the Swiss bank had argued the regulator waited too long to file its claim under both British and European antitrust laws, U.K. Judge Richard Snowden found that the FDIC simply didn’t have access to information it would have needed to submit its case earlier.

The FDIC filed suit contending that the lender had violated either European Union or U.K. anticompetition legislation by coordinating with other banks to fix the LIBOR artificially. The case was filed in March 2017, well past the six-year “primary limitation period” during which most actions can legitimately be brought under those laws, UBS argued.

The FDIC countered that it didn’t have enough information to reasonably infer that UBS had deliberately colluded with other banks on the LIBOR-setting panel until March 2011, when key regulatory findings and courtroom testimony revealed positive evidence of deliberate coordination between the so-called “panel banks.” That meant its 2017 lawsuit was still actionable, according to the regulator.

The case is one of many brought in the U.S. and Europe over allegations of rigging LIBOR, a common interest rate benchmark linked to more than $800 trillion in securities. Banks have paid billions of dollars in fines and other penalties to U.S. and U.K. authorities over manipulation claims. In the wake of LIBOR-related scandals, financial officials throughout the world are exploring other benchmarks that might be used as a substitute.

For his ruling Monday, Snowden considered a series of news reports and economic commentaries from between 2008 and 2011, determining that none gave conclusive evidence the FDIC could reasonably have used to begin its action against UBS.

Particularly given that officials had not inferred bank collusion from the publicly available evidence until June 2012, Snowden said it would have been unreasonable to have expected the FDIC to have reached that inference over a year earlier.

Snowden said the evidence needed to “tip the balance and make it likely that [UBS] was also involved” in collusion wasn’t available until well after 2007, meaning the FDIC’s lawsuit remained actionable as of 2017. He dismissed UBS’ application to have the suit thrown out.