UK Trial Judge Sets LIBOR Case for Trial in Fall 2013
In the United States, LIBOR cases are going through endless "Twiqbal" motions. In the UK, on the other hand, LIBOR cases are being set for trial. And, over there, some are attacking the defenses of the banks (e.g. everybody knew LIBOR was rigged) by pointing to bank CEO’s denying knowledge of the rigging. That point-counterpoint highlights the tensions and conflicts that sometimes exist between a company and its senior officers. Set out below is a key quote from an Irish Times article on a LIBOR case:
"Based in Wolverhampton in the Midlands, Guardian Care Homes used Barclays’ services in 2007 to hedge its position on interest rates, buying two interest rate swaps from the bank, a deal it says cost it £12 million (€14.9 million). Its action, which Barclays maintains has no merit, claims the bank sold the swaps despite knowing that they were based on a false Libor rate.
In allowing the case to proceed to trial, Mr Justice Flaux had some harsh words for Barclays at the pre-trial hearing on Monday.
“Any senior management who gave the matter a moment’s thought would have concluded any customer would be entitled to expect that the rate had not been manipulated,” he said. In attempting to have the case dismissed, Barclays had argued that Guardian Care Homes entered into the swaps deals “with sufficient understanding to exercise their own judgment.”
Given that former Barclays boss Bob Diamond, who resigned over the scandal, claimed to have no knowledge of the widespread rate-rigging in his own bank, it would have been a big ask for a small Wolverhampton care homes operator to have had much of a clue about what was really going on in London trading rooms."