Schwab Sues Banks for Manipulating Libor
Charles Schwab has filed suit in U.S. District Court in San Francisco, California against major banks claiming that they manipulated the London interbank offered rate (Libor), according to Bloomberg. In the lawsuit, the Charles Schwab Corporation claims that the banks involved in the Libor manipulation scheme were able to pay lower interest rates on short term paper that Schwab funds bought from the banks and other firms, allowing them to make “hundreds of millions, if not billions, of ill gotten gains.”
According to the article, there have been several lawsuits already filed regarding the manipulation of the Libor. As a result, global investigations have been initiated by the authorities. Several of the banks named in the lawsuit were UBS AG, Bank of America Corporation and Citigroup Incorporated, among others. The claims of securities fraud and racketeering among others, is for an unspecified sum that could be trebled under antitrust law.
As early as 2008, the Wall Street Journal had touched on the possibility of Libor manipulation due to some quotes received from banks. However, a study by experts and academia did not conclusively confirm manipulation of Libor, notwithstanding some unusual quotes.