A New York federal judge has preliminarily approved a settlement that will require JPMorgan Chase & Co. and Deutsche Bank AG to pay $148 million to resolve two investor suits alleging they rigged the London Interbank Offered Rate (Libor). U.S. District Judge George B. Daniels gave preliminary approval to the settlement, which requires JPMorgan to pay $71 million and Deutsche Bank to pay $78 million. A hearing to consider the fairness of the settlements before final approval is scheduled for Nov. 9.
A multiyear investigation into banks’ alleged rigging of Libor – which tracks how much banks charge one another to borrow funds – has focused on whether employees at the world’s largest banks made fraudulent submissions to a London-based trade association that calculated and published the benchmark interest rate.
The two investor lawsuits – the Sonterra case filed in 2015 and another known as the Laydon case filed in 2012 – alleged that JPMorgan, Deutsche Bank, Citigroup Inc. and about 20 other banks conspired to rig yen-denominated Libor, the Euroyen Tokyo Interbank Offered Rate and Euroyen Tibor contracts.
Judge Daniels had previously dismissed the Sonterra action in March. He found that those investors didn’t have standing to bring their claims. Although that decision is being appealed, Judge Daniels agreed in June to amend his judgment to put JPMorgan and Deutsche Bank back in the case for purposes of finalizing the settlements; the banks had reached the settlement with the investors before the case was dismissed.
In their motion to approve the settlements, the investors told Judge Daniels that allowing his subsequent ruling on standing to block previously agreed-to settlements would “vitiate the very bargain that the settling parties struck” and could have far-reaching consequences by blocking other non-settling Defendants from eliminating their litigation risks and “burying the hatchet with Plaintiffs.” The settlement motion stated:
Forcing the parties to continue litigating their appeal instead of settling – on the theory that standing does not exist – would be perverse and run roughshod over the judicial policy in favor of settlement.
The investors have already received final approval for other settlements, agreeing to a $23 million settlement with Citibank and RP Martin Holdings Ltd. and a $35 million settlement with HSBC. All of the settlements have included agreements from the banks to provide more information about the alleged rigging. Those banks are still involved in the Laydon case, but Judge Daniels dismissed claims in that case against three foreign institutions – ICAP Europe Ltd., Tullett Prebon PLC and Lloyds Banking Group PLC – in March.
The investors are represented by Vincent Briganti, Geoffrey M. Horn and Peter D. St. Phillip of Lowey Dannenberg Cohen & Hart PC, Joseph J. Tabacco Jr., Todd A. Seaver, Patrick T. Egan and Daryl DeValerio Andrews of Berman DeValerio, and Christopher Lovell and Gary S. Jacobson of Lovell Stewart Halebian Jacobson LLP. The cases are Laydon v. Mizuho Bank Ltd. et al., (case number 1:12-cv-03419) and Sonterra Capital Master Fund Ltd. et al. v. UBS AG et al. (case number 1:15-cv-05844) both in the U.S. District Court for the Southern District of New York.
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