Cleaning Up Wall Street: LIBOR, FX, and Antitrust

By Paola Henry

The London Interbank Offered Rate (“Libor”) is the most widely used benchmark interest rate worldwide.[1] Banks use Libor to determine the rate to lend money to one another for short-term loans.[2]  Libor is also used as a benchmark to determine the interest rates on mortgages, student loans, credit cards, derivatives, corporate bonds, and many other debt instruments and financial products.[3]  When banks began to observe indications that the financial markets were in jeopardy in 2007 prior to the global financial crisis, a group of brokers from various banks conspired together to alter the Libor rates.[4]  Regulators and the media began to notice that the rates appeared to be manipulated and the Wall Street Journal noted in 2008, that “‘[o]ne of the most important barometers of the world’s financial health could be sending false signals. In a development that has implications for borrowers everywhere, from Russian oil producers to homeowners in Detroit, bankers and traders are expressing concerns that the London interbank offered rate is becoming unreliable.’”[5]  The banks sought to avoid alerting the market of their downturn in financial position and began deliberately providing low estimates on their borrowing costs.[6] Bank traders were “pushing Libor around to boost their profits.”[7] Over the course of several years, multiple banks conspired to manipulate Libor, the FX spot market, the price of U.S. dollars and euro exchanges, and the yen LIBOR.

The manipulation of these rates led the Department of Justice’s Antitrust and Criminal Divisions and the FBI to investigate possible collusion activity intended to manipulate the price of U.S. dollars and euros exchanges in the FX spot market.[8] “The dollar-euro spot market is one of the world’s largest financial markets. On a daily basis, there are approximately $500 billion worth of dollars and euros traded in this market.”[9]  In May 2015, four major Wall Street banks – Citicorp, JPMorgan, Chase & Co., Barclays PLC, and The Royal Bank of Scotland PLC plead guilty to federal felony antitrust charges under the Sherman Act for conspiring to manipulate the dollar-euro spot market.[10]  UBS AG later joined the previous four banks, agreeing to plead guilty to manipulating Libor charges.[11]

The banks and executives that plead guilty in the Libor litigation conspired to manipulate the Libor interest rates, subverting the marketplace, for their own financial gain.[12] Initially, the banks were charged with both conspiracy and federal antitrust violations under the Sherman Act.[13] However, Judge Buchwald of the District Court for the Southern District of New York dismissed the antitrust claims.[14] “Judge Buchwald eliminated the core antitrust claims from the litigation in 2013, finding that the Libor-setting process was not supposed to be about competition in the first place. However, the Second Circuit reinstated those antitrust claims, explaining that the investors had adequately alleged a price-fixing scheme and did not need to separately allege competitive harm to survive a motion to dismiss.”[15]

On January 17, 2017, the United States Supreme Court rejected Bank of America, Citigroup, and JPMorgan Chase’s appeal, refusing to bar antitrust lawsuits that accuse the banks of conspiring to rig Libor.[16] The Court’s decision not to review the Second Circuit’s claim will have implications for similar litigation where banks have conspired to rig other rates like Euribor, ISDAfix, and FX, foreign currency exchange prices.[17] Under the Second Circuit’s decision, private investors can enforce antitrust damages for the Libor scandal.[18] This private litigation “is separate from Libor rigging probes that have resulted in roughly $9 billion in sanctions worldwide” to authorities including the United States Department of Justice and the European Commission.[19] The Supreme Court’s decision not to hear this appeal will undoubtedly have implications for antitrust cases involving financial market manipulation in the future.



[1] See Liam Vaughan & Gavin Finch, Libor Scandal: The Bankers Who Fixed the World’s Most Important Number, The Guardian (Jan. 18, 2017),

[2] See id.

[3] See Liam Vaughan & Gavin Finch, Libor Scandal: The Bankers Who Fixed the World’s Most Important Number, The Guardian (Jan. 18, 2017),

[4] See id.

[5] See id.

[6] See id. (noting that the banks were seeking to avoid tipping off the world markets that they were “desperate for cash”).

[7] See id.

[8] Division Achieves Important Milestones in Financial Industry Cleanup: Division Update Spring 2016, (last visited Jan. 20, 2017).

[9] Id.

[10] See id.

[11] See id.

[12] See Vaughan & Finch, supra note 1.

[13] In re: LIBOR-Based Financial Instruments Antitrust Litig., No. 11 MDL 2252 (NRB), 2016 WL 7378980, at *1 (S.D.N.Y. Dec. 20, 2016).

[14] See id; see also Joyce Hanson, Banks Say Forex Ruling Changes Nothing in Libor Case, Law360 (Oct. 5, 2016),

[15] See Hanson, supra note 14; see also Gelboim v. Bank of Am. Corp., 135 S. Ct. 897, 899 (2015).

[16] See Greg Stohr, Banks Rejected by High Court, Lose Bid to Derail Libor Suits, BloombergPolitics (Jan. 17, 2017),

[17] See Eric Kroh, High Court Libor Appeal Tests Bedrock Of Rate-Fixing Suits, Law360 (Jan. 13, 2017),

[18] See id.

[19] Lawrence Hurley, U.S. Top Court Rejects Banks Over Libor Antitrust Lawsuits, Reuters (Jan. 17, 2017),


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