Mizuho Financial Group Inc. (8411) and JPMorgan Chase & Co. (JPM:US) are among about 20 banks and their affiliates that must face an investor lawsuit accusing them of manipulating benchmark interest rates.
U.S. District Judge George Daniels in Manhattan said in a decision yesterday that the investor, who alleges losses from short positions on euroyen Tibor futures contracts, can proceed against all the banks with his claim under the Commodity Exchange Act for price manipulation and aiding and abetting.
The investor, Jeffrey Laydon, who seeks to represent other investors in a group lawsuit, or class action, said in an amended complaint last year that the banks conspired to fix the euroyen Tokyo interbank offered rate and the London interbank offered rate for the yen.
Regulators around the world have been probing whether firms colluded to manipulate interest-rate benchmarks including Libor, which affects more than $300 trillion of securities worldwide. Financial institutions have paid about $6 billion so far to resolve criminal and civil claims in the U.S. and Europe that they manipulated benchmark interest rates.
The probes have have led to fines and settlements for lenders including Royal Bank of Scotland Group Plc, Barclays Plc (BARC), UBS AG (UBSN) and Rabobank Groep.
The Federal Deposit Insurance Corp. this month sued Bank of America Corp. (BAC:US), Citigroup Inc. (C:US), and Credit Suisse Group AG (CSGN), among 16 of the world’s biggest banks, for alleged manipulating the Libor from 2007 to 2011.
Riichirou Tanaka, a spokesman for Chiyoda-Ku, Japan-based Mizuho, declined to comment on yesterday’s ruling. Joe Evangelisti, a spokesman for New York-based JPMorgan, didn’t immediately respond to an e-mail after regular business hours yesterday seeking comment on it.
The Tokyo interbank offered rate, or Tibor, is set by the Japanese Bankers Association based on submissions from 15 banks for yen and 14 lenders for euroyen Tibor, according to the industry group’s website.
The association said last year it will revise rules for Tibor and put them in a code of conduct that banks must observe when making submissions.
RBS’s local brokerage head resigned in April last year after Japan’s financial regulator ordered the unit to improve operations following attempts to manipulate benchmark rates. The Financial Services Agency told New York-based Citigroup and Zurich-based UBS to suspend trading linked to Libor and Tibor in January 2012 after finding that employees tried to influence benchmark rates.
The case is Laydon v. Mizuho Bank Ltd., 12-03419, U.S. District Court, Southern District of New York (Manhattan).
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