The D & O Diary : Directors and Officers Liability and Insurance : The D & O Diary : Kevin LaCroix : Securities Laws, Corporate Fraud, D & O Litigation

On March 29, 2013, in a ruling that she acknowledged some might find to be “unexpected” in light of the substantial regulatory fines and penalties that some of the defendants have paid, Southern District of New York Naomi Reice Buchwald granted the defendants’ motions to dismiss the antitrust and RICO claims in the consolidated Libor-based antitrust litigation. Judge Buchwald also dismissed the plaintiffs’ state law claims and some of the plaintiffs’ commodities manipulation claims. However, she denied the defendants’ motions to dismiss at least a portion of the plaintiffs’ commodities manipulation claims. A copy of Judge Buchwald’s massive 161-page opinion can be found here.

As detailed here, the consolidated litigation arises out of allegations that the banks involved with setting the Libor benchmark interest rate conspired to manipulate the benchmark. The plaintiffs – several municipalities, commodities traders and investors, bondholders and the Schwab financial firm, among many others – variously allege that suppression of the Libor benchmark reduced the amount of interest income they earned on various financial instruments. The various cases were consolidated before Judge Buchwald. The defendants moved to dismiss.

In her March 29 Opinion, Judge Buchwald granted the defendants’ motions to dismiss as to all of plaintiffs’ claims, except for a portion of the plaintiffs’ commodities manipulations claims. All of the dismissals were with prejudice, except for her dismissal of plaintiffs’ state law claims, over which she declined to exercise supplemental jurisdiction and therefore she dismissed the state law claims without prejudice.

First, she dismissed the plaintiffs’ antitrust claims because the plaintiffs failed to allege an antitrust injury and therefore lacked standing to assert antitrust claims. In order to bring an antitrust claim, a plaintiff “must demonstrate not only that it suffered injury and that the injury resulted from defendants’ conduct, but also that the injury resulted from the anticompetitive nature of the defendants’ conduct.” Judge Buchwald found that “the alleged collusion occurred in an arena in which defendants never did and never were intended to compete.” Though the defendants allegedly “agreed to lie about the interest rates they were paying,” this presents allegations “of misrepresentation, and possibly fraud, not of failure to compete.”

She added that “the process by which banks submit LIBOR quotes to the BBA is not itself competitive, and plaintiffs have not alleged that defendants’ conduct had an anticompetitive effect in any market in which defendants compete.”

Second, Judge Buchwald denied the defendants’ motions to dismiss the commodities manipulation claims that had been raised by the so-called “Exchange-Based Plaintiffs,” who claimed that the defendants had manipulated Eurodollar futures contracts in violation of the Commodities Exchange Act. She found that the plaintiffs had adequately pled the manipulation claims – although she noted that she has “doubts about whether plaintiffs will ultimately be able to demonstrate that they sold or settled their Eurodollar contracts at a loss as a result of defendants’ conduct.” However, she found that, because press coverage in early 2008 had loudly raise concerns about problems with Libor, the plaintiffs were on inquiry notice about possible claims in May 2008. She concluded that the plaintiffs’ claims based on contracts entered before May 29, 2008 are time-barred. She raised a concern that claims based on contracts entered between May 29, 2008 and April 15, 2009 (two years before the plaintiffs filed their complaint) may also be time-barred but she declined to dismiss those claims at this point.

Third, in reliance on the PSLRA amendments to RICO, Judge Buchwald granted the defendants’ motion to dismiss the plaintiffs’ RICO claim. The PSLRA bars plaintiffs from bringing a RICO claim based on predicate acts that could have been subject to a securities fraud action. Judge Buchwald concluded that the alleged wrongful acts underlying the RICO claims could have been the subject of a claim for securities fraud. She also found that the RICO claims were barred in any event as they impermissibly seek extraterritorial application of U.S. law; RICO applies only domestically, “meaning that the alleged ‘enterprise’ must be a domestic enterprise,” whereas here the “enterprise alleged by plaintiffs is based in England.”

Finally, Judge Buchwald dismissed all of the plaintiffs’ state law claims. She dismissed the plaintiffs’ state law antitrust claims with prejudice on the same grounds on which she had granted the motions to dismiss the plaintiffs’ claims based on federal antitrust law. She declined to exercise supplemental jurisdiction over the plaintiffs’ remaining state law claims, which she dismissed without prejudice.

In concluding her massive opinion, Judge Buchwald noted that “it might be unexpected that we are dismissing a substantial portion of plaintiffs’ claims,” given the massive regulatory settlements that several of the defendants have entered. These results, she said, are “not as incongruous as they appear,” noting that under the statutes invoked here, “there are many requirements that private plaintiffs must satisfy, but which government agencies need not.” The focuses of public and private enforcement differ, and “the broad public interest behind the statutes invoked here, such as integrity of the markets and competition, are being addressed by ongoing government enforcement.”

She added that the “private actions which seek damages and attorney’s fees must be examined closely to ensure that the plaintiffs who are suing are the ones properly entitled to recover and that the suit is, I fact serving the public purposes of the laws being invoked.” Although she is “fully cognizant” that several defendants have entered massive settlements, “we find that only some of the claims that plaintiffs have asserted may properly proceed.”

Discussion

As a result of Judge Buchwald’s rulings, only a small portion of some of the claimants’ claims will go forward. Only the claimants who asserted commodities manipulation in connection with exchange-based transaction have continuing claims, and then only a portion of those claims.  All of the many other plaintiffs’ claims have been entirely dismissed. These plaintiffs can of course try to pursue their state law claims – which were dismissed without prejudice -- in state court; they can also appeal Judge Buchwald’s ruling. The might do both, appeal the rulings on their federal claims while separately pursuing their state law claims.

As Judge Buchwald noted at the outset of her opinion, Libor-related claims have continued to be filed even after the litigation was consolidated before her. She stayed these many more recently filed cases while she addressed the pending motions to dismiss in the earliest filed cases. The various legal rulings in her March 29 order presumptively will apply to all of these other cases that are also now before her.

Her rulings presumptively will affect other cases that had been filed elsewhere and not yet consolidated in her court. For example, her rulings undoubtedly will affect the Libor-related action that Freddie Mac filed on March 13, 2013 in the Eastern District of Virginia (about which refer here, second item). Though her decision, as a district court ruling, has no precedential impact, it does have persuasive effect, and given the incredibly painstaking nature of her rulings, they undoubtedly will have an impact on these other cases even if they are not consolidated in Judge Buchwald’s court. Of course, if these other cases are consolidated before Judge Buchwald, the litigants can look to her March 29 opinion to determine how their cases will fare in her court.

There are, however, at least some cases that will not be affected (at least not directly) by Judge Buchwald’s opinion. Not all of the Libor-related cases were asserted antitrust or other federal statutory claims. There have been Libor-related claims filed solely based upon state law theories of recovery -- for example, based on allegations of fraud (refer for example here). These claims may be subject to jurisdictional limitations and the state law claims may also be subject to their own sets of defenses. But these claims at least are not directly affected by Judge Buchwald’s rulings. The claims may also even be boosted by portions of her ruling, as for example, where she observed that the allegations that the defendants agreed to lie about the interest rates they are paying may support a allegations of “misrepresentation, and possibly of fraud, but not of a failure to compete.”

But though the state law claims may remain, Judge Buchwald’s ruling on the antitrust claims have to provide substantial relief to the banks involved. One of the big concerns facing the banks has been the possibility that their entry into regulatory settlements could handicap them in the private antitrust litigation, which includes the possibility of treble damages. If the looming possibility of adverse effects in separate civil litigation is removed, it may be easier for the banks that have not yet resolved the regulatory actions to conclude the regulators’ actions. Of course, Judge Buchwald’s rulings must also survive any appeal if they are to be of reliable comfort to the banks involved.

UPDATE: In an excellent April 1, 2012 post on her On the Case blog (here), Alison Frankel has a very detailed analysis of what remains of these cases, what the implications are for the other cases before Judge Buchwald, and what the implications are for cases not yet  before her.

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Swiss banking giant UBS has become the second global financial institution to enter a series of massive regulatory settlements in connection with the ongoing Libor scandal investigation. As detailed in its December 19, 2012 press release (here), UBS has agreed to pay a total of about 1.4 billion Swiss francs (about $1.54 billion at current exchange rates) in fines and disgorgements to regulators in the U.S., U.K. and Switzerland to resolve Libor-related investigations. Background regarding the Libor-scandal investigations can be found here.

The regulatory settlements include the company’s agreement to pay a $700 million penalty to settle charges with the U.S. Commodities Futures Trading Commission, as disclosed in the CFTC’s  December 19, 2012 press release (here); an agreement to pay a 160 million U.K. pound penalty (about $259.2 million) to the U.K. Financial Services Authority, as discussed in the FSA’s December 19, 2012 Final Notice (refer here); an agreement with the Swiss securities authority, FINMA, to pay a fine of about $64.3 million, as discussed in FINMA’s December 19, 2012 Press Release (here).

In addition, UBS’s wholly-owned subsidiary, UBS Securities Japan Co. Ltd., has agreed to plead guilty to one-count of a felony wire fraud in a criminal information filed in the District of Connecticut against the subsidiary. According to the U.S. Department of Justice’s December 19, 2012 press release (here), the subsidiary has agreed to pay a $100 million penalty. The Swiss parent company has also entered a non-prosecution agreement with the DoJ requiring UBS to pay an additional $400 million penalty.  The DoJ’s December 18, 2012 statement of facts in connection with the non-prosecution agreement can be found here.

The $500 million in criminal penalties together with the other amounts that the company has agreed to pay in the related regulatory settlements brings the total cost company’s total resolution costs to over $1.5 billion.

The Department of Justice press release also discloses that in addition to the criminal information filed against UBS Japan, the DoJ has also filed a criminal complaint in federal court in Manhattan against two former senior UBS traders, Tom Alexander William Hayes and Roger Darin, charging them with conspiracy, wire fraud and price fixing in connection with their alleged attempts to manipulate Yen Libor interest rates in order to produce trading profits in derivatives trading positions that Hayes maintained. A copy of the criminal complaint can be found here.

The various regulatory filings describe a course of conduct that was both extensive and enduring. For example the FSA Final Notice alleges violations over a six-year period between January 2005 and December 2010. The Final Notice alleges that the manipulation of Libor rates were “routine, widespread and condoned by a number of Managers with direct responsibility for the relevant business area.” The Final Notice “engaged in this serious misconduct in order to serve its own interests.” The misconduct “caused serious harm to other market participants.”

The regulatory filings contain particular detail regarding the alleged manipulation of the Yen Libor rate, but the UBS press release report that the alleged misconduct involve a number of different benchmark rates including, in addition to the Yen Libor: the Libor rates for the Great Britain Pound, the U.S. Dollar, the Swiss France, and the Euro, as well as Euribor rates and the Euroyen Tibor rates.

The regulatory and criminal filings not only allege that UBS attempted to manipulate Libor benchmark rates and other benchmark rates by gaming its own rate submissions to the rate-setting authorities, but also that UBS traders attempted to manipulate the rates through conversations and requests made to and through interdealer brokers and even to and through other Libor panel banks. The CFTC’s press release references “more than 2,000 instances of unlawful conduct involving dozens of UBS employees, colluding with other panel banks and inducing interdealer brokers to spread false information and influence other banks.” The CFTC filing expressly states that through these efforts UBS “at times succeeded in manipulating the fixing of Yen Libor.”

UBS’s negotiated settlements resolves the pending regulatory and criminal investigations but they hardly represent the end of the company’s Libor-scandal related woes. As the company itself acknowledges in its December 19 press release, investigations by other regulatory authorities, as well as private litigation, “remain ongoing notwithstanding today’s announcements.”

Indeed, the various filings and submissions will certainly prove to be extraordinarily helpful to the plaintiffs in the various lawsuits already pending against the company, particularly the consolidated Libor-related antitrust litigation pending in federal court in Manhattan. The regulatory filings are replete with rich details of the alleged efforts to manipulate the benchmark, some of theme quite provocative. The CFTC helpfully excerpted particularly noteworthy examples of supposedly manipulative communications in a separate page on its website; these carefully culled excerpts undoubtedly will make their way into amended pleadings in the various pending antitrust cases. In addition attached to the criminal complaint are copies of the emails and other written communications upon which the DoJ relied in bringing the criminal charges.

The extensive detail provided in the regulatory and criminal filings will substantially bolster the claimants’ allegations in the pending civil cases and could even encourage other claimants to come forward. As noted in a December 19, 2012 Economist Magazine article about the settlement entitled “Horribly Rotten, Comically Stupid“ (here), “the details in these settlements suggest that lawyers representing clients in a clutch of class-action lawsuits in America against banks including UBS will have a field day.”

Moreover, as detailed in the Wall Street Journal’s December 19, 2012 article entitled “Why the UBS Settlement Really Matters” (here), the various regulatory filings contain extensive factual material suggesting that UBS not only attempted to manipulate the benchmark rates, but that working through interdealer brokers and other Libor panel banks, actually succeeded in manipulating the benchmark rates. The regulators’ affirmative allegation that UBS “succeeded” in manipulating the Libor rates could significantly boost the antitrust claimants’ allegations. The Economist article linked above observed that “UBS tried and apparently succeeded in some cases in getting other firms to collude in manipulating rates. That collusion strengthens the case of civil litigants in America who are arguing in court that banks worked together to fix prices.”

There is another interesting aspect to the alleged involvement of the third-party interdealer brokers. These allegations suggest for the first time that the pool of potential defendants for the claimants to target potentially could go beyond just the Libor rate-settling banks themselves. Indeed, last week when British authorities arrested three individuals in connection with the ongoing Libor scandal, two of the three men arrested were employees of interbroker dealer RP Martin. (The third individual is Thomas Hayes, the former UBS and Citi trader named as one of the defendants in the DoJ’s criminal complaint mentioned above.)

The FSA Final Notice specifically alleges, without naming the interbroker dealers involved, that at least four UBS Traders made more than 1,000 requests to eleven brokers at six broker firms in connection with efforts to manipulate rates. The implication is that these six interbroker dealer firms could not only themselves become embroiled in the ongoing investigation but also that they could get drawn into related civil litigation.

Just as additional private civil litigation followed in the wake of Barclays’ entry into regulatory settlements earlier this year, it seems probable that there could be further civil litigation given the revelations and allegations in UBS’s regulatory settlements. For example, shortly after Barclays announced its settlements, there was a raft of follow-on litigation filed. In particular, the company’s shareholders filed securities litigation against the company and certain of its officers alleging material misrepresentations about the company and its internal controls. In light of the regulatory allegations against UBS, and in particular regulatory allegations about the weaknesses of UBS’s internal controls, it would not be surprising if shareholder litigation involving UBS were to be filed. (Though UBS is based in Switzerland, its shares trade on the NYSE exchange. UBS shareholders that purchased their shares on the U.S. exchange could assert claims against the company under the U.S. securities laws.)

While the factual allegations in the various regulatory filings undoubtedly will bolster the claims of private civil litigants, the factual allegations do not provide much help with regard to at least one of the barriers the antitrust claimants face. As I noted in my overview of the Libor-scandal related issues (here), the manipulation of Libor benchmark rates did not necessarily hurt everyone involved in Libor-sensitive transactions. Some market participants would have been aided by the manipulation, particularly debtors whose interest payment obligations were suppressed by benchmark manipulation. Some market participants likely were both helped and hurt across their entire financial portfolio. To further complicate things, the latest allegations seem to suggest that traders maneuvered to push rates up at times and at other times to push them down. Though the regulatory filings assert that UBS’s attempts to manipulate the benchmark rates “caused serious harm to other market participants,” these conclusory allegations, though helpful for the claimants, will not solve the claimants’ problems of substantiated how and to what extent the manipulations damaged the claimants.

(At the same time, there are some strong suggestions elsewhere that some investors were significantly hurt by the manipulation of Libor and other benchmark rates. For example, the Wall Street Journal is reporting in a December 19, 2012 article that, according to an as yet unpublished internal report from the inspector general for the agency’s regulator, the interest income losses on mortgage backed securities held at Fannie Mae and Freddie Mac due to the manipulation of the benchmark rates may have exceeded $3 billion. The report supposedly recommends that the agencies consider their legal options.)

One particular aspect of the UBS regulatory settlements that the other banks involved in the scandal will want to note is the fact that, as massive as were the fines and penalties to which UBS agreed, the fines and penalties could have been even higher were it not for UBS’s cooperation. The FSA final notice specifically states that UBS received a 20% discount for its cooperation; without its cooperation, UBS’s 160 million pound settlement would have been 200 million pounds. The CFTC also acknowledged UBS’s cooperation. The message to the other Libor panel banks is not only that it could be very costly for them to extricate themselves from the regulatory investigations but also that if their cooperation is not forthcoming it could be even worse for them.

The guilty plea of the UBS subsidiary is obviously a significant development as well, but it is not unprecedented. In September 2009, in connection Pfizer’s agreement to pay what was the largest criminal fine in U.S. history in connection with the alleged misbranding of certain pharmaceuticals, one of Pfizer’s subsidiaries agreed to plead guilty to one count of misbranding of a pharmaceutical. 

Alison Frankel has a particularly strong commentary on the factual allegations in the regulatory filings relating to UBS’s regulatory settlements in a December 19, 2012 post on her On the Case blog (here).

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At the risk of sounding repetitive, I must report here that there has been yet another Libor-scandal related lawsuit filed in the Southern District of New York. The latest lawsuit, filed on July 30, 2012, purports to be filed on behalf of a class of investors who bought U.S. dollar Libor-based derivatives beginning August 1, 2007. A copy of the complaint in this latest action can be found here.

The lawsuit was filed by 33-35 Green Pond Road Associates, LLC, which bought an interest rate swap with a floating interest rate tied to the U.S. dollar Libor benchmark rate. The plaintiffs’ complaint names as defendants the 16 banks that were members of the U.S dollar Libor panel during the class period.

The purported class on whose behalf the action was filed is a detailed construction; the complaint purports to be filed on behalf of all persons or entities “who purchased U.S. dollar LIBOR-Based Derivatives” in the United States from one of 25 non-Defendant commercial banks and insurance companies “based directly on the rates set by Defendants, from at least as early as August 1, 2007 through such time as the effects of the Defendants’ illegal conduct ceased.” The 25 non-Defendant banks and insurance companies include such banks and insurance companies as Wells Fargo, Met Life, Goldman Sachs, Morgan Stanley, Keycorp and Northern Trust, among others.

The complaint asserts a single count for damages based on alleged violations of the Sherman Anti-Trust Act. The complaint alleges an unlawful conspiracy to manipulate and suppress the U.S. dollar Libor benchmark rate. The complaint further alleges that by manipulating Libor, the defendants paid lower returns to customers who bought Libor based derivatives. The complaint alleges that the manipulation of Libor affected purchasers of all Libor-based derivatives, whether or not the purchaser purchased from a defendant bank or a non-defendant bank.

This lawsuit is the latest purported class action to allege that the U.S. Dollar Libor benchmark rate setting banks illegally colluded to manipulate Libor, injuring investors in securities cased on the benchmark rate. As detailed at length here, a consolidated antitrust class action is now pending before Southern District of New York Judge Naomi Buchwald. There have now been multiple complaints filed raising similar allegations, and I am sure I will not be the only one to note a very striking similarity between the factual allegations in this latest complaint and the earlier complaint.

This latest complaint would appear to be an example of what Alison Frankel, in a July 30, 2012 post on her On the Case blog (here), called the “brawl” developing among plaintiffs’ law firms as they jockey to try to get a piece of the Libor-scandal litigation action.

The latest suits, including the one identified above, seem to suggest that the later arriving plaintiffs’ firms are now trying a two-pronged approach to try to claim their a piece of the Libor-scandal action. These firms seem to be trying to identify a specific identifiable group within the larger collection of persons aggrieved by the Libor manipulation on whose behalf to try to assert claims; and the firms also appear to be trying to identify distinct legal theories on which to proceed. This latest case represents an example of the former type of initiative, as it purports to be filed on behalf of investors who bought Libor-rate derivative rom a specified group of non-defendant banks and insurance companies.  The new lawsuit about which I wrote yesterday, in which the plaintiff asserted only common law claims but no antitrust claims, is an example of the latter category.

From the perspective an outsider (and one to who antitrust litigation is relatively unfamiliar turf), it seems curious that the plaintiffs in this case would expressly define their class to limit it to those derivative purchasers who bought their securities from non-defendant banks. At least based on initial impressions, this approach would seem to invite a defense motion based on the Illinois Brick doctrine, which holds that indirect purchasers cannot assert claims for damages under the antitrust laws. I will be the first to concede, especially since the plaintiff’s approach seems quite calculated, that there may be a method to the plaintiff’s approach that I am simply not registering. (On the other hand, the carefully crafted class description may simply represent an effort to carve out a class distinct from classes identified in previously filed Libor-scandal related antitrust complaints.)

There undoubtedly will be many more lawsuits to come. Indeed, the story surrounding the Libor-scandal is still only just emerging. The July 31, 2012 Wall Street Journal carried a lead article entitled “RBS Braces Itself for a Libor Deal” (here), about how RBS is readying itself to get its moment in the spotlight as it attempts to negotiate resolutions of the pending regulatory and enforcement actions pending against the company in connection with the Libor-scandal. Among other things, the article speculates that public outcry in response to the anticipated regulatory and investigative settlements could cost RBS CEO Stephen Hester his job.

The Journal article does not go on to speculate on the extent to which any regulatory settlement might be followed by civil litigation. The bank is already the target of many of the pending lawsuits (including for example, the new lawsuit described above) and the possibility of further litigation following a resolution of the regulatory actions seems likely. RBS is of course only one of many banks in line for this same likely sequence of events. There undoubtedly will be more to come over the months ahead.

My prior overview on the Libor scandal and related litigation can be found here.

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In the latest lawsuit to arise from the rapidly evolving Libor scandal, a New York bank has filed a purported class action in the Southern District of New York, seeking to recover damages from the U.S. Dollar Libor rate setting banks for fraud. The complaint, which was filed July 25, 2012 and which can be found here, purports to be filed on behalf of all New York based lending institutions.

The plaintiff in this latest suit is Berkshire Bank, which, according to the Wall Street Journal’s July 30. 2012 article about the new lawsuit (here), has eleven branches in New York and New Jersey and about $881 in assets. The bank’s complaint purports to be filed on behalf of a class of “all banks, savings & loan institutions, and credit unions headquartered in the State of New York, or with the majority of their operations in the State of New York, that originated loans, purchased whole loans, or purchased interests in loans with interest rated tied to Libor, which rates adjusted at any time between August 1, 2007 and May 31, 2010.”

The defendants in the lawsuit include the 16 banks on the panel that set the U.S. dollar London interbank offered rate (Libor) between August 2007 and May 2012. (There are actually 21 named defendants, as multiple related corporate entities have been named as defendants for certain of the Libor setting banks.)

The complaint alleges that the plaintiff banks “suffered damages as a result of Defendants’ fraudulent conduct in artificially decreasing the USD LIBOR rate during the Class Period, causing them to receive lower interest than they would have been entitled but for the Defendants’ fraud.” The specific harm the plaintiff alleges is that the reduction of Libor brought about by the defendants’ alleged manipulation of Libor reduced the amount of interest the plaintiff banks could earn on their outstanding loans. The complaint asserts substantive claims for fraud and for unjust enrichment/disgorgement.

This latest suit is an interesting variation on the Libor-scandal litigation theme. Unlike many of the other lawsuits filed so far (including a prior antitrust class action purportedly filed on behalf of all community banks), this latest lawsuit does not allege claims under the federal antitrust laws. The absence of this allegation may relieve the plaintiffs of the challenging burden of showing that the defendants acted collectively in setting the rates. The plaintiffs’ assertion only of common law claims may also avoid certain antitrust claim defenses, such as those available under the Illinois Brick doctrine (which prohibits indirect purchasers from asserting antitrust claims).

On the other hand, in order to prevail on their fraud claims, the plaintiffs will have to meet the state of mind requirement -- that the defendants acted intentionally. Another concern may be the location of the alleged fraudulent conduct and whether there is a sufficient basis for the assertion of fraud claims in the U.S. And in addition, the plaintiff banks in this case cannot avoid the difficult damages proof problems that will face all claimants in these Libor-scandal cases; that is, the suppressed Libor rates may have helped and hurt the plaintiff banks in different ways and at different times, depending on the specific interest-rate related activities in which the banks were engaged.

Evan Weinberger has an July 27, 2012 Law 360 article entitled “Libor’s Complex Web May Limit Rate-Rigging Damages Claims” detail the proof problems associated prospective claimants Libor-scandal related damages claims, here (registration required).

The purported plaintiff class also seems somewhat heterogeneous. The different depositary institutions may or may not have used Libor-sensitive rates in its lending activities during the class period, or may have used it in different ways. The inclusion of not only banks but S&Ls and credit unions also diversifies the class in potentially complicating ways.

Nevertheless, this latest lawsuit represents an unwelcome development for the banks ensnared in the Libor scandal. The case itself represents a new litigation approach based on a new theory of recovery, and it raises the specter that the various rate setting banks could face a multitude of similar lawsuits filed on behalf of depositary institutions in the other states.

The other thing about this latest case is that it shows that the potential claimants and their attorneys are now and will continue to be casting about for alternative ways to try to recover damages connected to the Libor scandal. There undoubtedly will be many more lawsuits asserting a variety of purported claims, one of the many possibilities suggesting that the litigation related to this scandal could be a huge burden for the Libor-setting banks.

Alison Frankel has an interesting Juy 30, 2012 post on her On the Case blog (here) in which she considers whether this last lawsuit represents a developing "brawl" among the plainiffs' lawyers to represent members of the class of persons harmed by the Libor scandal.

Very special thanks to a loyal reader for sending me a copy of the complaint.

My recent overview of the Libor scandal and of the scandal-related litigation can be found here.

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