| NEW YORK
NEW YORK Feb 7 Royal Bank of Scotland Group
Plc's admission that its employees coordinated with a
trader at another bank to manipulate benchmark interest rates is
not necessarily the knock-out punch needed by plaintiffs who
accuse the British-based bank of collusion.
As part of a deferred prosecution agreement with the U.S.
Department of Justice announced on Wednesday by British and
American authorities, RBS admitted its derivatives traders
agreed with a UBS AG trader to seek to manipulate the
London interbank offered rate, known as Libor, calculated for
the Japanese yen.
But that agreement would not be considered a final judgment
and therefore could not be used as evidence the bank engaged in
an antitrust conspiracy, some legal experts said.
"It's not evidence of anything," said Eleanor Fox, a
professor at the New York University School of Law specializing
in antitrust. "It's only a settlement."
Under the Clayton Act, a U.S. antitrust statute, final
judgments obtained by the government can be used by plaintiffs
as evidence of wrongdoing by defendants. But the law also makes
clear that plaintiffs cannot use "consent judgments or decrees
entered before any testimony has been taken."
RBS, which agreed to pay $612 million to U.S. and British
authorities, is the third bank to resolve liability with
regulators for its role in rate-rigging. Switzerland's UBS
agreed in December to pay penalties of $1.5 billion and
Britain's Barclays Bank Plc has paid $453 million.
Parts of those settlements have been used to boost the
credibility of lawsuits filed by private plaintiffs.
RBS and some of the world's other biggest banks are facing
several class action lawsuits alleging they colluded to
manipulate Libor, which sets prices on trillions of derivatives
and other financial products. The lawsuits claim billions of
dollars in damages.
In one of the biggest cases, the city of Baltimore has filed
a class action on behalf of entities and individuals who
purchased in the United States financial instruments indexed to
Libor between August 2007 and May 2010.
For such plaintiffs as Baltimore, the most valuable part of
the RBS settlement and other similar government deals could come
from the underlying documents that led to those agreements,
according to legal experts. But to gain access to those
documents, the plaintiffs will likely have to survive a motion
to dismiss by the defendants.
In the Baltimore case, a hearing on the defendants' motion
to dismiss will be heard on March 5 by U.S. District Judge Naomi
Reice Buchwald in Manhattan. William Carmody, an attorney
representing the city of Baltimore, said on Wednesday he had not
carefully studied RBS's deferred prosecution agreement, but
added that the statement of facts contained in it was remarkable
for its length and specificity.
"It's incredibly helpful for our case," Carmody added.