Freddie Mac sues BofA, UBS, JPMorgan alleging Libor rigging

Banks Named

Representatives of the banks who declined to comment on the lawsuit were Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup; Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan; Brandon Ashcraft, a Barclays spokesman; Bill Halldin, a Bank of America spokesman; Victoria Harmon, a spokeswoman for Credit Suisse; and Ed Canaday, a spokesman for Edinburgh-based Royal Bank of Scotland.

Eberhard Roll, a Portigon AG spokesman, didn’t respond to e-mail and phone messages requesting comment.

Calls to Bank of Tokyo-Mitsubishi UFJ Ltd. and Norinchukin Bank, both of Tokyo, which also were named in the complaint, weren’t answered on a public holiday.

“The BBA is aware of the lawsuit in the United States and is unable to comment,” Brian Mairs, a spokesman for British Bankers’ Association, said in an e-mail.

Brad German, a spokesman for McLean, Virginia-based Freddie Mac, said the company doesn’t comment on litigation. Denise Dunckel, a spokeswoman for the Federal Housing Finance Agency, the conservator of Freddie Mac, also declined to comment.

Freddie Mac and its sister company, Washington-based Fannie Mae, could have lost a combined $3 billion because of Libor manipulation, the auditor of the FHFA said in a Nov. 3 internal memo urging the regulator to investigate further.

Floating Rate

Freddie Mac and Fannie Mae use Libor to determine interest payments on their investments in floating-rate financial instruments such as bonds and swaps.

The two companies, which package mortgages into securities on which they guarantee payments of principal and interest, have been under U.S. conservatorship since 2008.

Barclays, UBS and RBS have been fined more than $2.5 billion following a global probe into Libor manipulation. Traders rigged the benchmark to profit from bets on derivatives, while banks sought to submit artificially low rates to appear financially healthier than they were, according to regulators.

From August 2007 and through at least May 2010, the defendants “formed a combination, conspiracy, or agreement,” to submit false Libor rates, Freddie Mac alleged in the complaint.

The case is Federal Home Loan Mortgage Corp. v. Bank of America Corp., 13-cv-00342, U.S. District Court, Eastern District of Virginia (Alexandria).

Bloomberg News

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