A federal judge on Wednesday suspended several new lawsuits that allege banks rigged key interest rates, saying she first needed to sort through the issues in an earlier round of related lawsuits.
U.S. District Judge Naomi Reice Buchwald said from the bench in Manhattan federal court that she first needed to see the course of earlier litigation over the same issue before she would allow the new lawsuits to go forward.
“While parties are free to file new complaints – and, indeed, are encouraged by the court to do so if they do so promptly… I am imposing a stay on any action that is not the subject of a pending motion to dismiss,” Buchwald said. “This stay will last until the current motions to dismiss are resolved.”
Buchwald is overseeing several proposed class actions, some filed as early as April 2011, by plaintiffs that include some big investors and local governments, such as the city of Baltimore. The plaintiffs say they were harmed in different ways by the banks’ suspected manipulation of the benchmark London interbank offered rate, commonly known as Libor.
Citigroup Inc., Bank of America Corp., HSBC and UBS are among the banks being sued over Libor, which is determined in London and sets interest on more than $350 trillion of securities from mortgages to complex derivatives.
The banks have said in court papers that the plaintiffs have failed to show how they acted to restrict competition, even if rates were misstated.
Buchwald’s decision puts on hold a lawsuit filed in May by the Community Bank & Trust of Sheboygan, two other proposed class-action complaints filed since then, as well as any new complaint that might be filed in the future.
In the meantime, Buchwald said, she would sort out ongoing motions filed by the defendants to dismiss the older lawsuits.
“I am assuming that this will work itself out in the next few weeks,” Buchwald said.
Charles Tompkins, a lawyer for Community Bank, did not immediately return a call seeking comment on Buchwald’s ruling. The 11-branch bank, which has assets of about $554 million, had filed suit in late May seeking class-action status so other community banks can join the litigation.
The judge also said at the hearing that she had received a letter from the banks on Tuesday conceding that the plaintiffs be allowed in future filings to reference a settlement that Barclays reached with regulators over the Libor probe.
Barclays PLC agreed on June 27 to pay $453 million to U.S. and British authorities to resolve the rate manipulation allegations, becoming the first bank to settle the investigation. The scandal led to resignation of Barclay’s chairman, chief executive officer and chief operating officer.
The cases are consolidated under In Re: Libor-Based Financial Instruments Antitrust Litigation, U.S. District Court for the Southern District of New York, No. 11-md-2262.
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