Berg is at the forefront of banking litigation, policy and issues arising out of the Banks’ historic activities. Our practical experiences and successes to-date have allowed us to assess the likely direction of future events.
One trader (whose name and bank may not be disclosed at this stage) has pleaded guilty to LIBOR manipulation. Today (26th May) a case against a second trader is starting at the Southwark crown court and the ex-trader faces eight counts of conspiracy to commit
fraud. It is the first UK LIBOR case brought by the Serious Fraud Office in the UK. 21 other individuals face similar trials.
The first UK trial is likely to be important because to date very little specific evidence has been made public. The industry knows how the fraud was perpetrated, but very little is known about the specific names involved and the specific dates of manipulation.
In any prospective litigation concerning these issues it is critically important to know the specifics of those involved and the relevant timelines. This also includes evidence relating to what senior bankers and through them the Bank itself, knew of the fraud
or ought reasonably to have known about it.
In regards to LIBOR there will be a slew of criminal cases being heard over the next two to five years. In civil claims we would expect the first LIBOR rigging cases to be heard by the end of the year or in the first quarter of next year if the banks involved
do not first agree to settle out of court. We believe that it is likely that Banks will want to keep civil claims out of the headlines following the very robust findings in two previous civil cases (one against Barclays and one against Deutsche Bank). Banks
are unlikely to be as confident on LIBOR as they have been on IRHP cases; in defending the latter the Banks have been assisted by a finding that certain clauses preclude reliance upon advice given by the Banks. Such contractual provisions do not assist in
a plea of fraudulent activity.
FX claims are going to be pursued over the coming months and years. There are some very serious issues that must be addressed before civil cases can be brought before the courts. For instance, the terms and conditions that a customer must sign before undertaking
FX trades includes a confirmation that the Bank may continue with a trade even if there is a conflict of interest with the customer. Following the £1.5 billion fines recently imposed, Barclays were notably prompt to react and put on their website for all
of their FX customers, a reminder of these terms and to update them specifically on the conflict of interest position.
FX claims should never be seen as a variant of the PPI claims culture; these cases will have an exceptionally complex factual matrix over-laid onto some very wide ranging terms and conditions imposed by the banks (predominantly the “conflicts of interests”
clauses). It is essential that bank customers who wish to review their position select a firm that has the experience and proven track record to tackle the cases and, additionally, not have a conflict with the banks. Berg has a proven track record and is
not conflicted in such cases.
(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.)