Officials with a number of states have been investigating and building a case against the banks involved in the price-fixing Libor scandal. Determining and proving losses incurred by the states could be difficult, however.
Libor Price-Fixing Scheme Affected Investments Around the World
Libor provides the benchmark for financial contracts around the world for everything from student loans to mortgage derivatives. It is intended to represent the rate for short-term loans between banks. It is set by the British Bankers Association based on a poll of prominent banks.
Barclays, one of the central banks involved in the scandal, admitted in its settlement that it and the other banks involved artificially depressed Libor during the financial crisis in order to appear healthier. Barclays paid $450 million to settle claims regarding its part in the price-fixing Libor scandal.
A number of lawsuits have already been filed against the large banks that allegedly participated in a price-fixing scheme to manipulate Libor. These suits were brought by private attorneys on behalf of cities and municipal agencies. Public officials are working toward bringing more expansive lawsuits against the banks to address the states’ losses. The Department of Justice is working with the states and developing its own investigation as well, according to the New York Times.
Most of the banks involved in the Libor scandal have reported that they are involved in discussions with regulators. Public officials are hoping that their own claims against the banks may benefit from settlements between federal regulators and banks allegedly involved in the price-fixing scandal.
One of the challenges to public officials in determining the amount of damages the states incurred is the uncertainty concerning the amount by which the banks artificially lowered Libor and the length of time the scheme continued. The lawsuits on file so far estimate that Libor was deliberately lowered by at least 0.30 percent for a period of three years.
Whistleblowers Can Help Stop Fraud
In the wake of the financial crisis, it has become clear that corporate corruption is a serious problem. Whistleblowers can help keep companies honest by reporting fraud of which they are aware.
Whistleblowers can benefit from the assistance of an experienced and skilled attorney. Waters & Kraus’ team of attorneys has decades of experience working with whistleblowers. Contact us or call our whistleblower attorneys at 800.226.9880 to learn more about our practice and how we can assist.