Barclays and the other financial firms being accused of manipulating the Libor lending rate are currently facing multitude of charges which also by the way equates to billion dollar damages if the court would find them guilty. Pushing a class suit against the firms, an American lawyer shared that the banking institutions involved should arm themselves with all the best possible defenses as they would be facing suits from the infuriated masses with the government deeply expressing its concern.
It could be presumed that a lot of individuals and entities would emerge as to be injured by the said manipulation pulled off by these firms. Michael Hausfeld, lawyer in the prominent Hausfeld LLP, is taking taking the lead in the class suit. The suit is filed with 21 financial firms as respondents.
Hausfeld, admits that their firm had been receiving a lot of inquiries all of which regarding the possibility of being included as plaintiff in the class suit. As of present time, individual and companies together as plaintiffs total to 33. The action was filed in New York last April. Hausfeld LLP is also exploring the option of launching legal steps in the regions of Europe and Asia.
Allegedly due to the pressure the charges are pressing upon the financial firms, Barclay’s chief executive Bob Diamond resigned Tuesday this week. As interpreted by the counsels, this could be the result of having all the weight on his shoulder as all the scandal had happened while he was on top, he cannot deny involvement. $451.4 million penalties were imposed perhaps that’s the turning point for him.
Barclays entered into a deal with the US government that in exchange of its pleading its guilt, it will not be prosecuted so long as it participates and cooperates in the investigation of other banking institutions. 14 employees of Barclays are reported to be under interrogation of the FBI.
Analyst would say that the decision of Barclays to the side of the government at the initiation of this investigation will do them good. Since they have already settled their position, they can start reorganizing their structure and rebuild their tainted reputation.
Investigations about the Libor rates were initiated back in 2008 because of doubtful movements in the rates. US Commodity Futures Trading Commission (CFTC) led this investigation. The doubts were raised during the height of the global recession. During that time, the rate suddenly went up allegedly due to the pressure in the banking structure until it suddenly dropped.
In 2010, a whistle blower emerged and came to CFTC. Financial Services Authority (FSA) was dragged into the matter which further exemplified the hidden manipulations in the Libor rates.
Two years later, the present scenario is that a class suit was instituted against more than 20 financial institutions, with 33 and counting plaintiff, all concerned with the outcome, and the claims for damages. Although currently, what is instituted is only a civil case, it is not far from reality if criminal charges and even extradition cases would be involved. The U.S. government is quite firm in its path to eradicate the practice and to teach the perpetrators lessons.