A group of international banks is seeking to dismiss an investor lawsuit relating to alleged manipulation of the key Libor interest rate – just as Barclays’ Chief Executive Bob Diamond has resigned over the scandal.
The banks late last week issued a motion to dismiss a consolidated legal action which ties together various separate cases brought by investors including US pension funds.
Among the plaintiffs is the Baltimore-based City of New Britain Firefighters’ and Police Benefit Fund and discount brokerage firm Charles Schwab. The City of Dania Beach Police & Firefighters’ Retirement System and the Carpenters Pension Fund of West Virginia have also taken action.
The motion was filed on June 29 at the US District Court, Southern District of New York by lawyers representing some of the world’s leading banks. They include Bank of America, Bank of Tokyo-Mitsubishi, Citigroup, Credit Suisse, Deutsche Bank, HBOS, HSBC, J.P. Morgan, Lloyds Bank, Royal Bank of Canada, the Royal Bank of Scotland and WestLB.
UBS AG and Barclays are filing separately “but joining in certain of the arguments herein”, the filing states.
The complaints “are devoid of any direct factual allegations of an actual agreement among defendants to suppress USD LIBOR”, the motion states.The allegations “do not support an inference of collective action by all defendants”.
The banks reject the investors’ argument that the primary motive for the banks was to hide their supposed financial weakness.
Although the scandal has caused uproar in Barclays’ home market – triggered by the announcement of £290m in fines and the resignations of Diamond and Barclays Chairman Marcus Agius – the issue has been in the legal works for several years. Experts have estimated that the potential damages could run into billions.
Diamond is set to appear before the Parliamentary Treasury Committee tomorrow.
Meanwhile, campaign group Fair Pensions has called for details of Diamond’s severance payments. Director of Engagement Louise Rouse said: “Remuneration at Barclays has been a source of controversy for the last few years and shareholders would likely regard it as unacceptable if a CEO departing in such circumstances was to receive severance payments.” Diamond’s departure was a “real test of the other board members’ mettle” as well as of its succession planning.
Proxy voting agency Manifest says the face value of Diamond’s ‘total remuneration received’ since he became a director in 2005 is £104,776,849 (€130,494,482.04). Link