Barclays, UBS Among Banks to Win Antitrust Appeal Over Yen-Libor

Barclays Plc, UBS Group AG, and other top financial institutions escaped litigation over their alleged scheme to rig two Japanese interest benchmarks, when a federal appeals court in Manhattan ruled that US market manipulation laws don’t cover their activity overseas.

The US Court of Appeals for the Second Circuit rejected claims against the banks under the Commodities Exchange Act, finding that the statute doesn’t apply to alleged conspiracies in Japan and London to rig the Euroyen Tibor and Yen-Libor benchmarks, respectively, without major links to the US.

The appeals court was also unconvinced by the lawsuit’s antitrust theories. Judge Michael H. Park, writing for the court, said the investor leading the case—who bought a futures contract based on an index pegged to one of the foreign benchmarks—was too “indirect” a victim to establish antitrust standing.

“He did not assert that he transacted directly with any of the defendants” but that he “traded his futures contract with unknown third parties,” Park wrote. “His allegations rely on an attenuated chain of causation that would complicate if not render impossible any damages calculation.”

The suit’s liability theories are also “highly speculative,” Park said. Judges Eunice C. Lee and Rosemary S. Pooler joined the opinion.

The ruling in favor of Barclays, UBS, Cooperatieve Rabobank UA, Lloyds Banking Group Plc, NatWest Group Plc, and Societe Generale SA affiliates upheld a decision by Judge George B. Daniels. Daniels dismissed the proposed class action in August 2020.

The case is Laydon v. Cooperatieve Rabobank UA, 2d Cir., No. 20-3626, amended opinion issued 12/8/22.