A View from Constantine Cannon’s London Office
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.
The case received publicity as a result of its being treated as a test case for other LIBOR rigging claims and because of certain comments by judges hearing applications in the case that were critical of Barclay’s arguments. It was expected that the trial this month would have led to the public disclosure of a large volume of documents relevant to LIBOR rigging (up to 200,000 documents according to pre-trial hearings) as well as embarrassing testimony by key former employees, including former Barclays CEO Bob Diamond, who resigned in 2012 following the LIBOR-related fines imposed by the U.K. Financial Services Authority.