A multistate probe of alleged manipulation of interest rates threatens to leave banks liable for billions of dollars in estimated state and local losses from the scandal, even as they settle with national regulators.
Bloomberg reports that New York Attorney General Eric Schneiderman is helping lead a probe into claims that banks rigged global benchmarks for borrowing, adding to investigations by other authorities, including the U.S. Justice Department. Royal Bank of Scotland agreed Wedneday to pay about $612m to U.S. and U.K. regulators to resolve their claims.
'The damage to public entities is a matter of great concern to state and local governments', Schneiderman said in an interview. 'These were allegations of really despicable conduct'. More than 12 states are participating in the probe, according to a person familiar with the matter who requested anonymity because he isn’t authorized to speak publicly.
States have joined forces as banks reach settlements to resolve liability tied to Libor, or the London interbank offered rate. Barclays Plc in June agreed to pay $454m, and in December, UBS AG agreed to pay $1.5bn.
By acting together, state attorneys general can amass potentially large claims against banks and gain leverage in any settlement negotiations, said Stephen Houck, an attorney at Menaker & Herrmann LLP and a former chief of the New York attorney general’s antitrust bureau. Antitrust law allows states to seek triple damages.
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