Second Circuit Affirms Decision Dismissing Putative Class Action Alleging Manipulation Of Yen-LIBOR And Euroyen TIBOR Rates

• Published date: 02 November 2022
• Subject Matter: Antitrust/Competition Law, Litigation, Mediation & Arbitration, Antitrust, EU Competition , Class Actions, Personal Injury
• Law Firm: Shearman & Sterling LLP
• Author: Shearman & Sterling LLP

On October 18, 2022, the United States Court of Appeals for the Second Circuit affirmed the dismissal by the United States District Court for the Southern District of New York of a putative class action against more than twenty banks and certain brokers alleging a conspiracy to manipulate Yen-LIBOR ("LIBOR") and Euroyen TIBOR ("TIBOR") rates. Laydon v. Co'peratieve Rabobank U.A., et al., No. 20-3626 (2d Cir. Oct. 18, 2022). Plaintiff brought claims under the Commodity Exchange Act ("CEA"), 7 U.S.C. ' 1 et seq., and the Sherman Antitrust Act, 15 U.S.C. ' 1 et seq., and sought leave to assert claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. ' 1962, 1964(c). The Court affirmed the district court's order dismissing the CEA and antitrust claims and denying leave to add the RICO claims, holding that the alleged conduct was impermissibly extraterritorial under the CEA, plaintiff lacked antitrust standing because he would not be an efficient enforcer of the antitrust laws, and plaintiff failed to allege proximate causation for a RICO claim.

The complaint alleged that defendants conspired to manipulate benchmark LIBOR and TIBOR rates, which reflected the interest rates at which banks could lend Japanese Yen outside of Japan. LIBOR and TIBOR rates differ in two key respects. First, TIBOR rates are set by the Japanese Bankers Association ("JBA"), while LIBOR rates are set by the British Bankers' Association ("BBA"). Second, TIBOR rates are set at 11:00 a.m. Tokyo time each business day, while LIBOR rates are set at 11:00 a.m. London time each business day. According to the complaint, defendant banks served as panel banks for the BBA in setting Yen-LIBOR rates, and the brokers allegedly helped manipulate the Yen-LIBOR and Euroyen TIBOR rates.

Plaintiff is a U.S. resident who allegedly traded three-month TIBOR futures contracts between January 1, 2006 and June 30, 2011. According to the complaint, these contracts were "agreement[s] to buy or sell a Euroyen time deposit having a principal value of 100,000,000 Japanese Yen with a three-month maturity commencing on a specific future date." Plaintiff allegedly initiated short positions on the Chicago Mercantile Exchange ("CME"), a U.S. based futures exchange, and allegedly incurred a loss as a result of defendants' purported manipulative behavior. Specifically, plaintiff alleged that defendants presented false Yen-Libor submissions to the BBA, which in turn allegedly affected the...