Record fines and impending legal settlements for banks over benchmark manipulation have strengthened the case for large institutional investors deciding whether to take legal action.
Investors including PGGM and AP7 – two of Europe’s biggest pension funds – have been examining for months whether to pursue legal claims against banks accused of having manipulated the London Interbank Offered Rate.
Their position has been given a boost by a recent UK Court of Appeal decision, which ruled that two companies could include rate-manipulation allegations in lawsuits concerning derivatives deals with Barclays and Deutsche Bank.
Simon Hart, a partner at RPC, the law firm, said that a number of “serious fund managers” have recently contacted him to establish if they now have “a better prospect of trying to make out a claim”.
The case for investors has been bolstered by Dutch bank Rabobank’s agreement last month to pay $1bn to US, UK and Dutch authorities after admitting that dozens of employees manipulated Libor and other key benchmark interest rates over six years.
Brussels, meanwhile, is expected to announce multibillion-euro fines for banks that took part in a cartel to rig Libor and Euribor, another global interest rate benchmark, as part of an antitrust investigation undertaken by the European Commission.
Stephen Smith, a partner at RPC, said that the commission’s findings will help form a clearer picture for investors currently assessing whether to take legal action.
He said: “We have been talking to various funds for some time and they have been actively asking what they should do. [Institutional investors] will increase their interest [in making claims] and I have no doubt other investors [will follow suit].”
Mr Smith said he has spoken to both aggressive investors keen to pursue these banks in the courts and conservative investors that are taking preliminary steps.
He added: “The more information that comes out and the more that their own investors agitate, these investors will come out of their comfort zone.”
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