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LIBOR claim by US agency will continue in London

10 August 2020. Published by Jake Hardy, Partner and Rosy Gibson, Associate

A decision in the London High Court has demonstrated that the fallout from the long-running LIBOR fixing scandal is far from over.

In a judgment by Mr Justice Snowden, the Court denied UBS's application to strike out a claim brought by a US government agency which alleges that it and several other banks had colluded to suppress LIBOR between 2007 and 2009: the proceedings will therefore continue.

The claim was brought in March 2017 by the Federal Deposit Insurance Corporation (FDIC) acting as receiver for 39 failed US banks. FDIC claims that banks including Barclays, RBS, Lloyds, Rabobank, Deutsche Bank, and UBS colluded to suppress the level of LIBOR by 'lowballing' submissions to the British Bankers' Association between August 2007 and the end of 2009.

UBS applied to strike out the claim because the conduct in question had taken place before March 2011, i.e. six years before the claim was issued, and was therefore time-barred. It also argued that there was publicly available commentary which raised concerns about LIBOR before March 2011, based on which FDIC could have brought its claim earlier. FDIC argued that its claim was not time-barred because it only became aware of the conduct in question in 2012, following regulatory findings by the FSA in the UK, both the Commodity and Futures Trading Commission and Department of Justice in the US, and the Financial Market Supervisory Authority in Switzerland.

The Court refused UBS's application. It found that none of the financial commentators UBS drew attention to had concluded that there must have been collusion between the banks or even that collusion was the most likely explanation for the sustained low levels of LIBOR. It was therefore realistic for FDIC to contend that the 2012 regulatory findings provided the evidence it needed to displace its natural assumption that the sustained low level of LIBOR had an innocent explanation and for it to bring its claim only once those findings had been made. FDIC's claim will therefore continue.

The full judgment can be read here.