BofA, Citigroup Are Accused by Schwab in Suit of Manipulating Libor Rates
Charles Schwab Corp. (SCHW), the largest independent brokerage by client assets, sued Bank of America Corp., Citigroup Inc. (C) and other banks claiming they manipulated the London interbank offered rate, or Libor, starting in 2007 in violation of U.S. antitrust law.
The banks conspired to depress Libor rates by understating their borrowing costs, thereby lowering their interest expenses on products tied to the rates, according to the lawsuit filed Aug. 23 in federal court in San Francisco, where Schwab is based.
The banks “reaped hundreds of millions, if not billions, of dollars in ill-gotten gains,” Schwab wrote.
In separate suits in April, three European asset-management firms and the Carpenters Pension Fund of West Virginia sued the banks claiming they manipulated Libor. U.S. and U.K. officials are cooperating in a probe of possible Libor manipulation, a person close to the investigation said in March.
The Schwab suit seeks unspecified damages, which may be tripled under antitrust law. It also includes claims for racketeering and securities fraud.
“We believe the suit is without merit,” Danielle Romero- Apsilos, a spokeswoman for New York-based Citigroup, said in an e-mail.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment.
The case is Schwab Money Market Fund v. Bank of America Corp. (BAC), 11-cv-4186, U.S. District Court, Northern District of California (San Francisco).
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