By Basil Katz
NEW YORK Aug 8 A federal judge on Wednesday
suspended several new lawsuits that allege banks rigged key
interest rates, saying she first needed to sort through the
issues in an earlier round of related lawsuits.
U.S. District Judge Naomi Reice Buchwald said from the bench
in Manhattan federal court that she first needed to see the
course of earlier litigation over the same issue before she
would allow the new lawsuits to go forward.
"While parties are free to file new complaints - and,
indeed, are encouraged by the court to do so if they do so
promptly... I am imposing a stay on any action that is not the
subject of a pending motion to dismiss," Buchwald said. "This
stay will last until the current motions to dismiss are
Buchwald is overseeing several proposed class actions, some
filed as early as April 2011, by plaintiffs that include some
big investors and local governments, such as the city of
Baltimore. The plaintiffs say they were harmed in different ways
by the banks' suspected manipulation of the benchmark London
interbank offered rate, commonly known as Libor.
Citigroup Inc, Bank of America Corp, HSBC
and UBS are among the banks being sued over
Libor, which is determined in London and sets interest on more
than $350 trillion of securities from mortgages to complex
The banks have said in court papers that the plaintiffs have
failed to show how they acted to restrict competition, even if
rates were misstated.
Buchwald's decision puts on hold a lawsuit filed in May by
the Community Bank & Trust of Sheboygan, two other proposed
class-action complaints filed since then, as well as any new
complaint that might be filed in the future.
In the meantime, Buchwald said, she would sort out ongoing
motions filed by the defendants to dismiss the older lawsuits.
"I am assuming that this will work itself out in the next
few weeks," Buchwald said.
Charles Tompkins, a lawyer for Community Bank, did not
immediately return a call seeking comment on Buchwald's ruling.
The 11-branch bank, which has assets of about $554 million, had
filed suit in late May seeking class-action status so other
community banks can join the litigation.
The judge also said at the hearing that she had received a
letter from the banks on Tuesday conceding that the plaintiffs
be allowed in future filings to reference a settlement that
Barclays reached with regulators over the Libor probe.
Barclays PLC agreed on June 27 to pay $453 million
to U.S. and British authorities to resolve the rate manipulation
allegations, becoming the first bank to settle the
investigation. The scandal led to resignation of Barclay's
chairman, chief executive officer and chief operating officer.
The cases are consolidated under In Re: Libor-Based
Financial Instruments Antitrust Litigation, U.S. District Court
for the Southern District of New York, No. 11-md-2262.