Major banks seek to escape Yen LIBOR rigging lawsuit
A number of the world’s biggest banks are trying to secure dismissal of a lawsuit alleging that they rigged Yen LIBOR.
In a motion to dismiss (and an accompanying memorandum) the second amended complaint against them, a raft of foreign bank defendants try to prove that the New York Southern District Court lacks jurisdiction over them. The documents, seen by FX News Group, were filed with the Court on October 9, 2020.
- The Plaintiffs
Let’s recall that the plaintiffs in this case include a pension fund based in California, two investment funds based in Texas, and the Massachusetts-based purported assignee of a defunct investment fund previously organized under the laws of the Cayman Islands. The plaintiffs allege that, during the putative Class Period, they (or their assignor) transacted in the United States in FX forwards, interest rate swaps, and/or swaptions indexed to Yen LIBOR, including direct transactions with some (but not all) Foreign Bank Defendants.
- The Foreign Bank Defendants
The “Foreign Bank Defendants” are Barclays PLC, Barclays Bank PLC, Coöperatieve Rabobank U.A., Lloyds Banking Group plc, Lloyds Bank plc, Merrill Lynch International, NatWest Markets plc; NatWest Group plc, NatWest Markets Securities Japan Ltd., Société Générale, UBS AG, and UBS Securities Japan Co. Ltd.
The defendants note that no plaintiff alleges that it entered into any direct transaction with certain of Foreign Bank Defendants, including Barclays PLC, LBG, Lloyds Bank, Rabobank, RBS Group, RBS Japan, and UBS Japan.
Technically, the Foreign Bank Defendants are six banks that served on the panel of banks whose submissions were used to calculate Yen LIBOR as well as seven affiliates of certain panel banks. Each Foreign Panel Bank Defendant and Foreign Affiliate is organized under the laws of a foreign country and headquartered abroad, the defendants say.
- The Motion to Dismiss
The defendants seek to dismiss the Second Amended Class Action Complaint (the SAC) for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).
The defendants stress that, since the commencement of this action in 2015, the Second Circuit and numerous judges in the Southern District of New York have declined to exercise personal jurisdiction over foreign banks (including most of the Foreign Bank Defendants) with respect to claims premised on alleged overseas manipulation of a foreign benchmark that purportedly impacted financial instruments traded, sold, and/or marketed in the United States. Viewed in light of this substantial body of authority, the SAC does not come close to establishing a prima facie case of personal jurisdiction over any Foreign Bank Defendant, the defendants say.
First, Foreign Bank Defendants claim that they are not subject to general jurisdiction because no Foreign Bank Defendant is “at home” in New York (or the United States). Each is incorporated under the laws of a foreign country and has its principal place of business outside the United States. Nor did any Foreign Bank Defendant consent to general jurisdiction in New York, whether by registering to do business in the forum, subjecting itself to regulation by state or federal authorities, or otherwise.
Second, Foreign Bank Defendants are not subject to specific personal jurisdiction because Plaintiffs do not plausibly allege any suit-related conduct in New York (or otherwise in the United States).
Plaintiffs’ claims are premised on the alleged manipulation of Yen LIBOR through the submission of purportedly false rates to a foreign trade association. At all relevant times, Yen LIBOR was administered from London based on submissions made from outside the United States.
Third, the plaintiffs appear to have abandoned reliance on a “conspiracy theory”. Without any basis for conspiracy jurisdiction, the plaintiffs cannot establish personal jurisdiction over any Foreign Bank Defendant by reference to conduct of any other alleged co-conspirator, the defendants say.
Finally, the banks argue that, if accepted, the plaintiffs’ theories of jurisdiction, premised on allegations of misconduct abroad with no nexus to the United States, would violate Foreign Bank Defendants’ due process rights and threaten international comity.
The lawsuit continues at the New York Southern District Court.