Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Citigroup agrees to settle yen LIBOR and TIBOR manipulation action for $23M, (Feb 3, 2016)

By Linda O’Brien, J.D., LL.M.

Citigroup has agreed to pay $23 million to settle claims by investors against major domestic and foreign financial institutions for conspiring to manipulate the London Interbank Offered Rate (LIBOR) for the Japanese yen and Tokyo Interbank Offered Rate (TIBOR) for the euro and Japanese yen, according to a notice of motion for preliminary approval of the settlement filed in the federal district court of New York City (Sonterra Capital Master Fund Ltd. v. UBS AG, Case No. 1:15-cv-05844).

Yen LIBOR and Euroyen TIBOR are the daily reference rates intended to reflect the interest rates at which banks offer to lend unsecured funds denominated in Japanese yen to other banks in the offshore wholesale money market. Yen-denominated interest rates issues that settle during European trading hours are generally priced using yen LIBOR rates set by the British Bankers’ Association, the leading trade association for the U.K. banking and financial services sector. Yen-denominated interest rates issues that settle during Asia-Pacific trading hours are generally priced using the Euroyen TIBOR rates set by the Japanese Bankers Association.

In July 2015, New York-based investment fund Sonterra Capital Master Fund and Hayman Capital Management, L.P., a Texas investment fund advisor, filed suit, alleging that several major domestic and foreign financial institutions and investment firms engaged in a conspiracy to restrain trade through their manipulation of the yen LIBOR and Euroyen TIBOR. The investor plaintiffs are seeking preliminary approval of proposed settlements under which defendant Citigroup, Inc. has agreed to pay $23 million to be distributed among eligible class members, and R.P. Martin Holdings Ltd. will cooperate in the litigation against the remaining defendants.

According to the memorandum in support of the plaintiffs’ motion, the proposed settlements meet the standards for preliminary approval since they were produced by well-informed, arms-length negotiations by experienced counsel; have no obvious deficiencies; do not favor the class representatives or segments of the class; and fall within the range of possible approval. Additionally, the Citigroup settlement is the initial “ice breaker” settlement in the action and provides the benefits of substantial monetary consideration to the settlement class as well serves as a potential catalyst for other defendants to settle.

The motion also requests that the court certify a class for settlement purposes defined as follows: all persons that engaged in a transaction in Euroyen-based derivatives during the period of January 1, 2006 through June 30, 2011.

A conference has been scheduled for April 7 to address the plaintiffs’ motion.

Attorneys: Geoffrey Milbank Horn (Lowey Dannenberg Cohen & Hart, PC) for Sonterra Capital Master Fund Ltd., Hayman Capital Management LP and California State Teachers' Retirement System. Lawrence Jay Zweifach (Gibson, Dunn & Crutcher, LLP) for UBS AG and UBS Securities Japan Co. Jeffrey Jason Resetarits (Shearman & Sterling LLP) for Mizuho Bank, Ltd.

Companies: Sonterra Capital Master Fund Ltd.; Hayman Capital Management LP; California State Teachers' Retirement System; UBS AG; UBS Securities Japan Co.; Mizuho Bank, Ltd.; Citigroup Inc.; Citibank, N.A.

News: Antitrust NewYorkNews