April 15, 2014

Barclays Settles Second LIBOR Mis-Selling Case

A View from Constantine Cannon’s London Office

By Natalia Mikolajczyk

Barclays confirmed on Friday that it has settled another case alleging that it mis-sold LIBOR-tied derivative products.

The lawsuit was filed by Domingos Da Silva Teixeira (DST), a family-owned construction and property company based in Braga, Portugal. As reported by the Financial Times, DST alleged that the British bank engaged in mis-selling, which involves misrepresenting the characteristics of a product or service, by “repeatedly induc[ing] it to restructure and replace its derivative products.”

DST identified 16 allegedly unsuitable derivative transactions, including interest-rate swaps, commodity-based swaps and a foreign-exchange swap. DST sought damages of 11.1 million euros ($15.4 million) in its claim before the Commercial Court in London. Although Barclays has admitted in a June 2012 settlement with the U.S. Department of Justice that it engaged in rigging of LIBOR and EURIBOR, Barclays maintained that DST did not suffer any loss from the manipulation. click here for more »

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Categories: Antitrust Litigation, International Competition Issues

    April 14, 2014

    Credit Card Issuers Defeat Claims They Conspired To Use Arbitration to Block Class Actions

    By Owen Glist

    American Express, Chase, and Discover have prevailed in a bench trial of a class action charging that the nation’s largest credit card issuers illegally agreed to prevent cardholders from using class actions to sue them. 

    While Judge William H. Pauley III of the U.S. District Court for the Southern District of New York ruled in favor of the defendants on Thursday, he also indicated the plaintiffs’ case was a near miss that just barely foundered on the crucial issue of whether the defendants had actually entered into a collusive agreement.

     The defendants – credit card issuers representing more than 80% of the credit card issuing market – had formed an industry “Arbitration Coalition” to promote the use of arbitration clauses to bar class actions.  Pursuant to a bench trial that was conducted last year – this being an exceedingly rare class action to go to trial – the district court concluded last week that plaintiffs failed “by a slender reed” to meet their burden of showing an antitrust conspiracy. click here for more »

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    Categories: Antitrust Litigation

      April 9, 2014

      Barclays Settles First LIBOR “Test Case”

      A View from Constantine Cannon’s London Office

      By Michael Petrides

      Barclays announced on Monday that it has reached an out of court settlement of British LIBOR-related litigation with Graiseley Properties, owner of Guardian Care Homes (GCH).

      The case concerned two interest rate swap contracts entered into by Graiseley and Barclays. Graiseley suffered substantial losses when base LIBOR rates fell.  Graiseley sought to escape its liability to Barclays by asserting claims that Barclays engaged in mis-selling, which involves misrepresenting the characteristics of a product or service.  Although Grassley originally alleged a case of innocent misrepresentation by Barclays, it succeeded in persuading the court to allow it to add fraudulent misrepresentation claims based on Barclay’s knowledge of LIBOR rigging once the LIBOR scandal became public knowledge. click here for more »

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      Categories: Antitrust Litigation, International Competition Issues

        April 7, 2014

        Libor Antitrust Plaintiffs Strike Out Again

        By Jean Kim

        The antitrust claims of yet another putative class of Libor plaintiffs have been dismissed by the U.S. District Court for the Southern District of New York.

        Finding that the plaintiff failed to adequately plead antitrust standing, Judge George Daniels dismissed the antitrust claims in Laydon v. Mizuho Bank, Ltd., a class action that alleges more than 20 banks manipulated the Euroyen Tokyo Interbank Offered Rate (Tibor) and the yen Libor.  Plaintiff alleged losses from shorting positions on Euroyen Tibor futures contracts, which allegedly were affected by defendants’ manipulation of rates.  Plaintiff’s case survives, however, because the court denied the defendants’ motion to dismiss the complaint’s Commodity Exchange Act claims.

        The court found that plaintiff failed to plead facts sufficient to establish that defendants’ manipulation of TIBOR and yen Libor rates was anticompetitive.  The court concluded that “[a]t most, Plaintiff alleges that prices were distorted,” not “that this was a result of a reduction of competition.”  The court also found that plaintiff failed to allege facts that demonstrated an adequate connection between the alleged misconduct (manipulation of rates) and any effect (increases in the price of Euroyen TIBOR futures). The court reasoned that not only was the alleged injury indirect, bit plaintiff’s theory involved a complicated series of market interactions with multiple causal links that rendered any claim of damages “speculative.” click here for more »

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        Categories: Antitrust Litigation

          April 1, 2014

          NLRB’s “Student-Athletes” Ruling Is Seen As Exposing School For Hypocrisy

          Last week’s decision by the National Labor Relations Board granting Northwestern University scholarship football players the right to unionize is sparking a debate over the hypocrisy of college sports.

          Constantine Cannon lawyers Gordon Schnell and David Scupp, who examined the NLRB decision in a post on this blog, express their views on the decision – and what it reveals about the big business of college sports – in an op-ed on cnn.com.  As Schnell and Scupp discuss in The hypocrisy of big-time college sports, amateurism in college sports is basically a myth that masks the reality that college athletes are employees who are responsible for the billions of dollars the NCAA and its members rake in each year.

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          Categories: Antitrust and Price Fixing

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