Deutsche Bank and Barclays lost a court bid to stop companies from linking claims about the manipulation of benchmark rates to lawsuits initially filed over improper sales of interest-rate hedging products
Bloomberg reports that the U.K. Court of Appeal in London said Unitech and Guardian Care Homes could try to void money-losing swap contracts because they were pegged to the London interbank offered rate.
The ruling resolves split decisions from lower courts.
Judge Andrew Longmore said that while the issues were complicated, they should be resolved at a full trial. 'The banks did propose the use of Libor and it must be arguable that, at very least, they were representing that their own participation in setting of the rate was an honest one'.
Regulatory probes into banks’ attempts to manipulate Libor have led to fines and settlements totaling about $3.7bn for firms including Barclays, Royal Bank of Scotland, UBS and ICAP, Guardian and Unitech said they wouldn’t have signed swap deals if they had known about the misconduct.
'With or without the Libor claims, the allegations of mis-selling have no merit', Barclays said in a statement. Guardian 'entered into their swap agreements with sufficient understanding to exercise their own judgment as to whether the products would meet their business objectives'.
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image: © Elliot Brown