BlackRock , Fidelity and Vanguard Group Inc., firms that
collectively manage more than $7 trillion, are gauging how their clients have
been hurt by Libor manipulation and whether to take legal action as at least a
dozen banks are being investigated for rate-rigging according to the gurus at Bloomberg
The money managers can take cues from Charles Schwab and the
city of Baltimore, which in lawsuits predating the record fine levied on
London-based Barclays Plc last month, sued lenders for artificially
suppressing, Libor, or the London interbank offered rate. Schwab alleged last
year that returns on money funds and short-term debt strategies were depressed
by the banks’ actions, while Baltimore’s lawsuit against Barclays and other banks
stems from lower returns on interest-rate swaps.
Libor-related litigation “has the potential to be the
biggest single set of cases coming out of the financial crisis because Libor is
built into so many transactions and Libor is so central to so many contracts,”
said John Coates, a professor of law and economics at Harvard Law School in
Cambridge, Massachusetts. “It’s like saying reports about the inflation rate
were wrong….”
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