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Administration May 2, 2012
Baltimore Fund Consolidates Pension Suit
May 2, 2012 (PLANSPONSOR.com) – The City of Baltimore and New Britain Firefighters’ Benefit Fund filed a consolidated and amended complaint against Citigroup Inc. Credit Suisse AG, Bank of America Corp. and more than a dozen other banks.
Reported by Tara Cantore
The complaint alleges the bank’s artificially “suppressed” the London interbank offered rate and it is one of four allegations being filed in the class-action lawsuit, reports Bloomberg.
“This case arises from a global conspiracy to manipulate Libor—the reference point for determining interest rates for trillions of dollars in financial instruments worldwide—by a cadre of prominent financial institutions,” stated the complaint. An analysis by outside consultants found that Libor was suppressed from 2007 to 2008, allowing the banks to mask their level of risk during a period of financial crisis, according to the complaint.
“By submitting an artificially low Libor quote,” banks send “a false signal that it is less risky than it truly is,” the complaint said.
In addition, for banks to submit Libor bids below the Federal Reserve Eurodollar Deposit Rate, the rate at which banks in the London Eurodollar market lend U.S. dollars to one another, “would be extremely unusual and is strong evidence of collusion among the banks,” according to the complaint.