BofA, Barclays sued by Houston on Libor manipulation claims

The Texas city seeks unspecified damages

Bank of America Corp., Barclays Plc and Citigroup Inc. are among a group of banks sued by the city of Houston for financial damages caused by the alleged manipulation of the London Interbank Offered Rate, or Libor.

Houston, the fourth-largest U.S. city, is one of the biggest to sue on rate-fixing allegations. The Texas city seeks unspecified damages for both receiving artificially low interest and paying artificially high rates on municipal investments dating back six years, according to a complaint filed today in federal court in Houston.

“The complaint specifically notes three examples of transactions in which the Libor manipulation was detrimental to the City of Houston,” Richard Mithoff, Houston’s lawyer, said in an e-mailed statement. “Damages to the city resulting from this global interest rate manipulation could be substantial.”

Global authorities have been investigating claims that more than a dozen banks altered submissions used to set benchmarks such as Libor to profit from bets on interest-rate derivatives or to make the lenders’ finances appear healthier.

Barclays, Royal Bank of Scotland Plc and UBS AG have settled regulators’ claims in the probe. A group of lawsuits against banks over manipulation of rates have been consolidated in federal court in Manhattan. In March, U.S. District Judge Naomi Buchwald dismissed antitrust claims by plaintiffs who said banks conspired to set Libor at artificial levels. She allowed some commodities-manipulations claims to proceed.

Cities

Besides Houston, other U.S. municipalities that have sued include Baltimore and San Diego County.

Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, declined to comment on the lawsuit. Scott Silvestri, a spokesman for Charlotte, North Carolina-based Bank of America, didn’t immediately return a call or e-mail. A call and e-mail seeking comment from London-based Barclays weren’t immediately returned.

Houston alleged that other members of the “global conspiracy to manipulate LIBOR” include Bank of Tokyo- Mitsubishi UFJ Ltd., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., Lloyds Banking Group Plc and Royal Bank of Canada.

The case is City of Houston v. Bank of America Corp., et al, 13-cv-02149, U.S. District Court, Southern District of Texas (Houston).

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