BlackRock Inc., Fidelity Investments and Vanguard Group Inc., firms that collectively manage more than $7 trillion, are gauging how their clients have been hurt by Libor manipulation and whether to take legal action as at least a dozen banks are being investigated for rate-rigging.
The money managers can take cues from Charles Schwab Corp. and the city of Baltimore, which in lawsuits predating the record fine levied on London-based Barclays Plc last month, sued lenders for artificially suppressing, Libor, or the London interbank offered rate. Schwab alleged last year that returns on money funds and short-term debt strategies were depressed by the banks’ actions, while Baltimore’s lawsuit against Barclays and other banks stems from lower returns on interest-rate swaps.
Laurence D. Fink, chief executive officer of BlackRock, said in a July 3 interview on Bloomberg Television’s “Market Makers” that Diamond “led with a lot of emotion which obviously” angered regulators and others in the U.K. “For me, it’s sad. I know Bob very well,” Fink said.
Regulators are looking at whether banks made submissions that understated funding costs during the credit crisis or if traders at the firms influenced Libor to boost profits. In addition to Barclays, UBS AG, Citigroup Inc., JPMorgan Chase & Co. and Credit Suisse Group AG are among at least a dozen banks to disclose inquiries.
The Supreme Court’s ruling in Illinois Brick Co. versus Illinois barred indirect purchasers from recovering federal antitrust damages, Andrew Verstein, a lecturer at Yale Law School, said in a telephone interview. Applied to the alleged manipulation of Libor, he said only investors such as Baltimore, that lost out in transactions directly with rate-rigging banks, might successfully sue.
Steven Vames, a spokesman in New York for Zurich-based Credit Suisse, declined to comment, as did Karina Byrne, a spokeswoman for UBS, Danielle-Romero Apsilos, a spokeswoman for Citigroup, Kerrie Cohen, a spokeswoman for Barclays, and Lawrence Grayson, a spokesman for Bank of America. Jennifer Zuccarelli, a spokeswoman for JPMorgan Chase, did not immediately return calls.