The Federal Deposit Insurance Corporation in the United State has sued Citigroup, HSBC and another 13 global financial institution heavyweight for their alleged manipulation of the Libor rate.
The FDIC sued the banks saying the manipulation had caused significant losses to over 38 banks in the U.S., which had to be shut down because of insolvency during the financial crisis of 2008.
The U.S. FDIC said the institutions accused cheated the banks that had to be closed in the U.S. dollar Libor swap as well as other agreements due to their manipulation of the Libor rates from 2007 to 2011.
The banks, said the FDIC suit suppressed the U.S. dollar Libor and did so to favor them.
The banks in the lawsuit are and or were participants in setting the Libor rate each day. The banks include from the U.S. JPMorgan Chase, Citigroup and Bank of America. From Germany, there is WestLB and Deutsche Bank.
In Britain, the banks are Barclays, Lloyds and HSBC. UBS and Credit Suisse from Switzerland were in the suit, as well the Royal Bank of Canada, Rabobank in the Netherlands and the Royal Bank of Scotland.
Several of those banks in the suit have already had to pay significant fines to justice authorities and regulators in Europe and the United States for taking part in the rate fixing.
In addition, the British Bankers’ Association was sued. The group at that time oversaw daily Libor rate fixing by the banks.
The suit said that the BBA was a participant in the alleged fixing scheme to protect revenue streams it had generated from Libor license sales and to appease the defendants of the Panel Bank that were BBA members.
The FDIC announced it would seek full damages from the losses the closed banks incurred, punitive damages and those damages from the violations of antitrust statutes in the U.S.
