June 30, 2014 / 5:05 PM / 5 years ago

U.S. Supreme Court to hear Libor antitrust appeal

(Reuters) - The U.S. Supreme Court said on Monday it would hear an appeal by investors whose antitrust claims over the manipulation of the global benchmark interest rate known as Libor were dismissed last year.

Bond investors who lost money in securities tied to the London Interbank Offered Rate asked the Supreme Court to allow their appeal to go forward, even as the district court hears related claims that are still pending.

The Supreme Court is expected to hold oral arguments on the case during its next term, which begins in October. The current nine-month term ends this week.

Since 2011, a diverse group of investors has filed dozens of lawsuits against the world’s largest banks, accusing them of manipulating Libor, a key benchmark interest rate at the heart of more than $550 trillion in financial products. The lawsuits have been centralized in the Southern District of New York.

In a March 29 decision last year, U.S. District Judge Naomi Reice Buchwald allowed investors to pursue some claims, but dismissed all their antitrust claims, gutting a key part of their cases.

Buchwald found that setting Libor was not a competitive process. So the plaintiffs could not establish that they were injured by anticompetitive behavior.

Setting Libor, she found, was a “cooperative endeavor” where otherwise competing banks submitted information to a trade association that set the rate. Without anticompetitive conduct, there can be no anticompetitive injury, the judge said.

A group of bond investors that made only antitrust claims appealed Buchwald’s decision to the 2nd U.S. Circuit Court of Appeals.

But the 2nd Circuit dismissed the appeal for lack of appellate jurisdiction because the district court had not dismissed all of the related consolidated complaints.

In their petition to the Supreme Court, the investors argued that appeals courts are divided over “whether and when the dismissal of an action that has been consolidated with other actions is an appealable final order.”

The investors said the Libor case was an “ideal vehicle” to resolve the split.

The banks, on the other hand, argued in a reply brief that a “piecemeal appeal would be inefficient and disruptive.”

Attorneys for both sides did not immediately respond to messages seeking comment.

The case is Ellen Gelboim, et al v. Bank of America Corp, et al, U.S. Supreme Court, No. 13-1174.

For bond investors: Thomas Goldstein of Goldstein & Russell.

For banks: Jeffrey Wall of Sullivan & Cromwell. (Reporting by Andrew Longstreth. Editing by Andre Grenon)

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