Libor Manipulation Probe and Litigation Update
Insurance Law Flash
The record-breaking £59.5 million fine imposed on Barclays by the Financial Services Authority and $360 million penalty imposed by the U.S. Commodity Futures Trading Commission and Department of Justice in connection with the improper submission of London InterBank Offered Rate (Libor) rates has lead to intense public scrutiny of Barclays’ practices, procedures and management and possible misconduct by other financial institutions.
Sedgwick has been watching this issue closely for a few months. In May, Chicago partners Eric Scheiner and Jennifer Broda wrote an article published in the PLUS Journal about the price-fixing cases in the U.S., the development of the investigations, and the impact for insurers before the headlines and Barclays settlement was announced.
As U.S. and U.K. regulators’ investigations into the conduct of other major banks are ongoing, it seems possible that, depending on their findings, they could also be the subject of significant penalties. This may fuel ongoing litigation in the U.S. against financial institutions and other parties in relation to Libor manipulation and it is possible similar claims may be made in other jurisdictions, such as the U.K.
Please click on the PDF link above for the in depth discussion by our financial services team in London and the U.S. on:
- The background to the allegations of Libor manipulation.
- Civil proceedings in the US and possible future claims.
- Investigations by regulators.
- The implications for insurers.