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© 2012 Labaton Sucharow LLP. All rights reserved. Disclaimer: This Presentation is Strictly For Educational Purposes Only and Does Not Offer Legal Advice Nor Create An Attorney-Client Relationship. January 2, 2014 Libor Litigation Overview: Securities, Antitrust and Regulatory Implications
© 2012 Labaton Sucharow LLP. All rights reserved. Thomas A. Dubbs Partner –Retained by various State Funds, including Ohio (AIG), New Jersey (STEC), Michigan (Bear Stearns), CALPERS (QWEST), State of New Mexico Funds (WellCare, HealthSouth as well as hedge funds and banks –Former Senior Vide President and Senior Litigation Counsel for Kidder, Peabody & Co. Incorporated Labaton Sucharow LLP Thomas A. Dubbs 2
© 2012 Labaton Sucharow LLP. All rights reserved. William P. Butterfield Partner –William P. Butterfield is a Partner at Hausfeld LLP in Washington D.C., where he chairs the Firms Financial Services Practice Group. He has represented governmental agencies, corporations, directors and officers, and investors in private litigation over securities, commodities, antitrust, and consumer claims, and in investigations commenced by the Securities and Exchange Commission. William P. Butterfield Hausfeld LLP 3
© 2012 Labaton Sucharow LLP. All rights reserved. Elkan Abramowitz Partner –Elkan Abramowitz is a Partner at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer PC in New York City. He is a leading white collar criminal defense lawyer with long experience in handling civil and criminal matters in state and federal court for individual and corporate clients. Morvillo, Abramovitz, Grand Iason, Anello & Bohrer PC Elkan Abramowitz 4
© 2012 Labaton Sucharow LLP. All rights reserved. 5 Overview of the Libor Scandal Libor Scandal: An Overview of Libor Banks now use Libor to set the prices on derivatives financial instruments tied to commodities, interest rates, currencies, and other assets. Libor is also considered a crucial indicator of the creditworthiness and liquidity of the banks that supply the information used to set Libor.
© 2012 Labaton Sucharow LLP. All rights reserved. 6 Overview of the Libor Scandal Libor Scandal: A Chronology In November 2007, bankers and other market participants began expressing concern to the British Bankers Association about whether Libor-setting banks were reporting rates that reflect their true borrowing costs. In May 2008, the Wall Street Journal published an analysis with findings that a number of banks submitted significantly lower borrowing costs for Libor than what other market measures, such as credit-default insurance. In March 2011, reports began to circulate that the U.S. Department of Justice, Securities and Exchange Commission, and the Commodity Futures Trading Commission had launched investigations in the Libor-setting banks for manipulating Libor.
© 2012 Labaton Sucharow LLP. All rights reserved. 7 Overview of the Libor Scandal Libor Scandal: A Chronology and the Barclays Scandal –Regulators concentrated their probes on two types of Libor manipulation that took place just before and during the global financial crisis: (1) false data submitted by bank to push Libor in a direction that would benefit their own traders; and (2) the intentional lowering of daily Libor rates by banks to make their institutions financial positions look better than they actually were.
© 2012 Labaton Sucharow LLP. All rights reserved. 8 Overview of the Libor Scandal Libor Scandal: A Chronology and the Barclays Scandal –On June 27, 2012, Barclays PLC agreed to pay a $453 million fine to settle accusations by the U.S. Commodity Futures Trading Commission and Department of Justice and the U.K. Financial Services Authority that it had colluded with other banks to artificially depress Libor. As part of the settlement, Barclays admitted to manipulating Libor beginning at least as early as 2005 and through 2009, in an effort to artificially bolster the Companys apparent liquidity, and to benefit the Companys interest-rate derivatives positions.
© 2012 Labaton Sucharow LLP. All rights reserved. 9 The Libor Scandal -Antitrust William Butterfield Beginning August 2011, many of the cases advancing claims relating to manipulation of Liborincluding the cases that do not advance antitrust claimswere consolidated into a single multidistrict litigation matter before Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York, under the caption In re LIBOR-Based Financial Instruments Antitrust Litigation, MDL No. 2262 (S.D.N.Y.).
© 2012 Labaton Sucharow LLP. All rights reserved. 10 © 2012 Labaton Sucharow LLP. All rights reserved. The Libor Scandal Elkan Abramowitz What we know and do not know about current state of LIBOR investigations Dos and Donts of Investigations
© 2012 Labaton Sucharow LLP. All rights reserved. Thomas Dubbs Individual and Class Suits In re Libor-Based Financial Instruments Antitrust Litigation, No. 11-MD-2262 (S.D.N.Y.) Class Suits in Consolidated Action: Claims of Over-the-Counter Plaintiffs: Sherman Act § 1; Clayton Act § 4; unjust enrichment & restitution Claims of Exchange-Based Plaintiffs: Commodity Exchange Act § 1 et seq.; Commodity Exchange Act (vicarious liability); Commodity Exchange Act § 22 (aiding and abetting); Sherman Act § 1; restitution/ disgorgement/unjust enrichment
© 2012 Labaton Sucharow LLP. All rights reserved. Thomas Dubbs Individual and Class Suits Claims of Bondholder Plaintiffs: Sherman Act § 1, Clayton Act § 4 Individual Suits in Consolidated Action: 3 Suits by Charles Schwab Entities: Sherman Act § 1; RICO; Cartwright Act, Cal. Bus. & Prof. Code §§ 16720 et seq.; interference with economic advantage (Cal. law); breach of implied covenant of good faith (Cal. law); unjust enrichment (Cal. law)
© 2012 Labaton Sucharow LLP. All rights reserved. 13 © 2012 Labaton Sucharow LLP. All rights reserved. The Libor Scandal - Securities Class Action – Barclays ADRs Securities Class Action – Barclays ADRs 3.6 percent of Barclays equity is traded via sponsored ADRs in the United States. When Barclays settlements were disclosed to the public on June 27, 2012, the Companys ADR price fell from $12.33 per share to $10.84 per share, or 12.08 percent. Class Period: July 10, 2007 and June 27, 2012. Barclays share price during the class period of the ADR Action. Allegations: Violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b 5, claiming that Barclays made false and misleading statements. Lead Plaintiff Deadline: September 10, 2012.  See Gusinsky v. Barclays PLC, No. 12-cv-5329 (S.D.N.Y. July 10, 2012).
© 2012 Labaton Sucharow LLP. All rights reserved. 14 © 2012 Labaton Sucharow LLP. All rights reserved. Overview of the Libor Scandal – General Considerations –International Aspects Government Cases are Ongoing and Regulatory Investigations are taking place worldwide –Canada –Japan –Singapore How do you look at your exposures?
P A R T P A R T Regulation of Business Administrative Agencies The Federal Trade Commission Act and Consumer Protection Laws Antitrust: The Sherman Act.
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