* Schwab says banks conspired to drive down Libor
* Regulators probing alleged manipulation
By Jonathan Stempel
NEW YORK, Aug 25 Charles Schwab Corp (SCHW.N),
the discount brokerage and money manager, has filed two
lawsuits accusing 11 major banks of conspiring to manipulate
Libor, which is used to set interest rates on hundreds of
trillions of dollars of securities.
According to complaints filed Tuesday with the U.S.
District Court in San Francisco, where Schwab is based, the
banks violated antitrust, racketeering and securities laws by
teaming up to depress the London Interbank Offered Rate, a
floating benchmark for what banks charge each other on
Schwab's lawsuits said the collusion deprived it of returns
on tens of billions of dollars of Libor-based investments that
the company and eight of its money market and ultra-short term
bond mutual funds made from 2007 to early 2011.
"Surreptitiously bilking investors of their rightful rates
of returns on their investments, defendants reaped hundreds of
millions, if not billions, of dollars in ill-gotten gains,"
Schwab said. Its lawsuits seek unspecified actual and punitive
damages, which Schwab said can be tripled under federal law.
Defendants include the three largest U.S. banks -- Bank of
America Corp (BAC.N), JPMorgan Chase & Co (JPM.N) and Citigroup
Inc (C.N). Others include Barclays Plc (BARC.L) Credit Suisse
Group AG CSGN.VX, Deutsche Bank AG (DBKGn.DE) HSBC Holdings
Plc (HSBA.L), Lloyds Banking Group Plc (LLOY.L), Royal Bank of
Scotland Group Plc (RBS.L), UBS AG UBSN.VX and WestLB AG
Bank of America spokesman Lawrence Grayson declined to
comment, but Citigroup spokeswoman Danielle Romero-Apsilos
said: "We believe the lawsuits are without merit." JPMorgan did
not immediately respond to a request for comment.
Schwab joins a variety of asset managers and pension funds
to sue over Libor, after U.S. and Japanese regulators were
reported earlier this year to have been investigating possible
manipulation, focused on the 2006-2008 period. [ID:nLDE72E216]
About $350 trillion of derivatives and other financial
products are based on Libor, and small declines in the rate can
cost borrowers and lenders billions of dollars in interest
Last month, UBS said authorities including the U.S.
Department of Justice had granted it conditional leniency or
conditional immunity in the probe, in exchange for the bank's
continued cooperation. [ID:nLDE76P095]
The cases are Schwab Money Market Fund et al v. Bank of
America Corp et al, and Charles Schwab Bank NA et al. v. Bank
of America Corp. et al; U.S. District Court, Northern District
of California, Nos. 11-04186 and 11-04187.
(Reporting by Jonathan Stempel, editing by Bernard Orr)