Citigroup Inc. has reached a $130 million settlement in New York federal court with investors who bought the bank’s financial products tied to the London Interbank Offered Rate (Libor). This makes Citigroup the second bank to settle with the investors over allegations the benchmark rate was manipulated. Citi and its Citibank NA subsidiary agreed to pay out $130 million in cash and cooperate with the investors, who purchased the products directly from the bank, in their ongoing case against a number of financial institutions. The settlement proposal was filed on Aug. 7, and it is “substantially similar” to one preliminarily approved by the court in December between Barclays PLC and the investors, who are called “over-the-counter” (OTC) Plaintiffs.

The litigation will continue against the remaining banks, which include Bank of America Corp., JPMorgan Chase & Co. and UBS AG. The Citi settlement follows what is called an “ice-breaker” settlement with Barclays in December. In that settlement, the OTC Plaintiffs received preliminary approval for a proposed $120 million settlement that also included a pledge that the bank would assist in the investigations into the other financial institutions in the suit. Investigations by government regulators around the world sparked a series of lawsuits that eventually were gathered into multidistrict litigation (MDL) in New York’s Southern District.

The OTC Plaintiffs in the instant suit, which include Yale University and Baltimore city officials, in May sought to certify a class of U.S.-based people or entities that directly purchased, from the Defendants or their subsidiaries, financial instruments that paid interest indexed to Libor and were owned between August 2007 and May 2010. The same month, a different group of Plaintiffs, U.S. lenders and traders on the Chicago Mercantile Exchange, asked for class certification on their Libor conspiracy claims. And the court in December dismissed a group of bondholders from the MDL, finding that since they did not directly transact with the banks, their injuries were too remote from the alleged conspiracy and they lacked standing as they were not efficient enforcers of the antitrust laws.

The case is Mayor and City Council of Baltimore et al. v. Credit Suisse AG et al. (case number 1:11-cv-05450) in the U.S. District Court for the Southern District of New York. The MDL is In re: Libor-based Financial Instruments Antitrust Litigation, (case number 2262) in the same court.


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