Benchmark Manipulation: Another SIBOR Settlement     

A few weeks ago, we posted about a series of settlements in the SIBOR benchmark manipulation litigation: Plaintiffs filed a motion for preliminary approval of a settlement with Credit Suisse, Deutsche Bank, HSBC, and ING Bank.  In that post, we noted that Plaintiffs’ filing contemplated a future settlement with the remaining 13 defendants.  Well, that day has now come, and on May 27, 2022, Plaintiffs filed motion for the preliminary approval of a class action settlement with the following banks:

  • Australia and New Zealand Banking Group, Ltd.
  • Bank of America, N.A.
  • Barclays Bank PLC
  • BNP Paribas, S.A.
  • Commerzbank AG
  • Crédit Agricole Corporate and Investment Bank
  • DBS Bank Ltd.
  • MUFG Bank, Ltd. (F/K/A The Bank Of Tokyo-Mitsubishi Ufj, Ltd.)
  • Oversea-Chinese Banking Corporation Limited
  • The Royal Bank of Scotland Plc (N/K/A Natwest Markets Plc)
  • Standard Chartered Bank
  • UBS Ag
  • United Overseas Bank Limited

The new settlements total $91 million. Together with the prior settlements, this brings Plaintiffs’ total take to $155,458,000.  Unlike the previous settlement agreements, which broke down payment amounts by Defendant, the documents filed on May 27th don’t provide any additional information with respect to the individual liabilities of these Defendants.

Plaintiff’s motion largely mirrors their previous filing, setting forth identical settlement classes and containing the same cooperation agreements.  Similarly, the new motion again indicates Plaintiffs’ intention to seek attorneys’ fees in an amount of “no more than one third of the Settlement Funds” resulting from the seven settlement agreements with the 19 Defendants.  They also continue to seek $750,000 in costs, and a maximum of $500,000 in Incentive Awards for the Representative Plaintiffs. 

In addition to their motion for preliminary approval, Plaintiffs also filed a supplemental memo of law in further support of approval of all settlements.  This brief addressed questions raised by the Court at the May 19, 2022 hearing on Plaintiff’s prior motion for preliminary approval, and focuses on “the adequacy of [the] settlements and the distribution plan.” Specifically, Plaintiffs address three primary issues:

(1) whether the settlement amounts are fair, given that the case settled before formal discovery (see May 19, 2022 Hearing Tr. at 12:7-9);

(2) whether a settlement class may be certified where the proposed class includes both buyers and sellers of SIBOR- and/or SOR-Based Derivatives and some might have benefitted from the alleged five-year multibank conspiracy (see May 19, 2022 Hearing Tr. at 14:21-24, 33:1-17); and, relatedly,

(3) whether the volume-based distribution plan that Representative Plaintiffs developed in consultation with their industry experts and economists is appropriate (see May 19, 2022 Hearing Tr. at 15:20-22, 16:18-19, 18:6- 9).

Supp. Br. at 1. With respect to the lack of discovery, Plaintiffs point to the “extensive, multifaceted investigation” undertaken by Plaintiffs with respect to the SIBOR/SOR markets and their potential damages, including the review of trading date and the engagement of a modeling expert. They also note that, as compared with other “IBOR” settlements, and “accounting for the differing sizes of the relevant markets, the settlements in this action are at least five times larger than those approved” in prior “IBOR” litigations. (Emphasis in original.)

Plaintiffs addressed the second question, regarding the potential that come class members might have benefited from the conspiracy, by pointing out that the Southern District has regularly approved settlements in this type of price-manipulation case where the settlement class included both buyers and sellers. This is because, Plaintiffs explain, the impact of the alleged manipulation on the individual class member is a merits determination, and not relevant to the question of class certification.  They also point out that class definitions limiting class members to only those who have suffered losses have been routinely rejected as a “impermissible dive into the merits of the plaintiffs’ complaint.”

With respect to the third question on their volume-based Distribution Plan, Plaintiffs note that the Plan was developed in conjunction with “leading economists,” and that allowed consideration of both individual trading volumes and the need for efficiency in administration. And again, they note that similar volume-based plans have been routinely approved in the District.

A hearing on the second motion for preliminary approval does not appear to have been scheduled yet.

This post was written by Alexandra M.C. Douglas.

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