Earlier this year, we posted a series of updates on briefing in the SIBOR benchmark manipulation litigation. (You can find those posts here, here, and here.) Today, we’re back to talk about a new development: settlements!
On May 13, 2022, Plaintiffs (Fund Liquidation Holdings, Moon Capital Partners, and Moon Capital Master Fund) filed a motion for the preliminary approval of class action settlement with four of the remaining defendants. Plaintiffs’ brief in support of their motion sets out settlement amounts as follows:
| Credit Suisse | $10,989,000 |
| Deutsche Bank | $11,000,000 |
| The HongKong and Shanghai Banking Corporation | $11,000,000 |
| ING Bank | $10,490,000 |
These settlements come on top of the two 2018 settlements with Citibank/Citigroup and JPMorgan Chase, for $9,990,000 and $10,989,000, respectively. Taken together, the two rounds of settlements net approximately $64,458,000 for Plaintiffs.
Notably, a footnote in Plaintiffs’ brief indicates that they have “reached an agreement in principle with thirteen additional defendants that, if approved by this Court, would fully resolve this action.” Among the outstanding defendants are Bank of America, Barclays, BNP Paribas, the Royal Bank of Scotland, and UBS.
Under all six settlements, the Settlement class is defined as:
All Persons (including both natural persons and entities) who purchased, sold, held, traded, or otherwise had any interest in SIBOR- and/or SOR-Based Derivatives during the Class Period. Excluded from the Settlement Class are the Defendants and any parent, subsidiary, affiliate or agent of any Defendant or any co-conspirator whether or not named as a Defendant, and the United States Government.
This definition is slightly narrower than that set forth in the Fourth Amended Class Action Complaint, which included “all persons or entities that engaged in U.S.-based transactions in financial instruments that were priced, benchmarked, and/or settled based on SIBOR and/or SOR” during the Class Period.
The six Settling Defendants further agree, to provide “Cooperation Materials” for use in the litigation, “should any of the Settlements not be approved.” They also agreed to aid in identifying potential Class Members and, if necessary, to “further validate” the Distribution Plan.
Plaintiffs also seek recovery of attorneys’ fees, referring to the “uncompensated work” performed by Plaintiffs’ Counsel since 2016. The fee sought will be “no more than one-third of the Settlement,” with a provision for costs and expenses of “no more than $500,000.” The motion also states an intention to seek “Incentive Awards” for the Representative Plaintiffs in an amount to be determined, but not to exceed $500,000.
The balance of the motion discusses the standards for preliminary approval. Plaintiffs take care to note that “[t]his Court is empowered to approve the Settlements because it has subject matter jurisdiction over this Action, as the Second Circuit determined in its decision of March 17, 2021.” As you may recall, motions for the preliminary approval of the Citi and JPMorgan Settlements were initially denied by the District Court, following that Court’s determination that it lacked subject matter jurisdiction over the action. On appeal, the Second Circuit instructed the District Court to “revisit” it’s approval of the settlements, “now that its jurisdiction over the case is clear.” Plaintiffs went on to explain that the settlements were “procedurally fair,” because it was the result of arm’s-length negotiations between counsel, because the class had been adequately represented by Class Representatives with interests that aligned with those of the larger class, and because Plaintiff’s counsel are sufficiently experienced so as to provide adequate representation to the class.
In terms of substantive fairness, Plaintiffs point out that the Settlement Amounts will not revert, regardless of how many proofs of claim are submitted, which will enhance the claimants’ recovery. Pointing to the number of motions to dismiss and amended pleadings, they also note that litigation of the issues in the case would be “complex and expensive to litigate,” requiring extensive and costly discovery and expert processes, and thus weighing in favor of approval of the settlement. Plaintiffs also discuss a damages analysis performed by their experts, who calculated a damages range between $389 million and $16.57 million; this places the settlement range in 11.51% – 16.57%.
Plaintiff’s note regarding the potential settlements with the other 13 defendants indicated that the parties required two more weeks to finalize their agreement, so we’ll be back at the end of the month with an update on that topic.
This post was written by Alexandra M.C. Douglas.