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  • Presentinga90MinuteEncorePresentationoftheTeleconferencewithLive,InteractiveQ&A

    LIBORManipulationLitigation:LIBORManipulationLitigation:LatestTrendsandDevelopmentsPursuingandDefendingIndividualandClassActionLIBORRelatedActions

    1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

    WEDNESDAY, DECEMBER 12, 2012

    Todays faculty features:

    Daniel L. Brockett, Partner, Quinn Emanuel Urquhart & Sullivan, New York

    Brian Murray, Partner, Murray Frank, New York

    Thomas A. Dubbs, Partner, Labaton Sucharow, New York

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  • LIBORMANIPULATIONLITIGATION:LATESTTRENDS&DEVELOPMENTS: PURSUING AND DEFENDING INDIVIDUALDEVELOPMENTS:PURSUINGANDDEFENDINGINDIVIDUAL

    ANDCLASSACTIONLIBORRELATEDACTIONS

    BrianP.Murray,Esq.MURRAYFRANKLLP

    275 Madison Avenue, Suite 801275MadisonAvenue,Suite801NewYork,NewYork10016

    2126821818BMURRAY@MURRAYFRANK COMBMURRAY@MURRAYFRANK.COM

  • WHAT IS LIBOR?WHATISLIBOR? LIBORispublishedundertheauspicesoftheBritishBankersAssociation(BBA),atradeassociationwithover200

    memberbanksthataddressesissuesinvolvingtheUnitedKingdombankingandfinancialservicesindustries.TheBBAd fi LIBORdefinesLIBORas:

    TherateatwhichanIndividualContributorPanelbankcouldborrowfunds,wereittodosobyaskingforandthenacceptinginterbankoffersinreasonablemarketsize,justpriorto11:00[a.m.]Londontime.

    Thisdefinitionhasbeeninplacesinceapproximately1998

    LIBORiscalculatedfortencurrencies.TheLIBORforagivencurrencyistheresultofacalculationbaseduponsubmissionsfromapanelofbanksforthatcurrency(theContributorPanel)selectedbytheBBA.EachmemberoftheContributorPanelsubmitsitsrateseveryLondonbusinessdaythroughelectronicmeanstoThomsonReuters,asanagentfortheBBA,by11:10a.m.LondonTime.OnceeachContributorPanelbankhassubmitteditsrate,thecontributedratesareranked.Thehighestandlowestquartilesareexcludedfromthecalculation,andthemiddletwoquartiles(i.e.,50%ofthesubmissions)areaveragedtoformulatetheresultingLIBORfixorsettingforthatparticularcurrencyandmaturity

    TheLIBORcontributionofeachContributorPanelbankissubmittedtobetweentwoandfivedecimalplaces,andtheLIBORfixisrounded,ifnecessary,tofivedecimalplaces.Inthecontextofmeasuringinterestrates,onebasispointisonehundredthofonepercent(0.01%)

    ThomsonReuterscalculatesandpublishestherateseachbusinessdaybyapproximately11:30a.m.LondonTime.Fifteenmaturities(ortenors)arequotedforeachcurrency,rangingfromovernighttotwelvemonths.Thepublishedratesare

    d il bl ld id b Th R t d th d t d th h l t i d th h i t fmadeavailableworldwidebyThomsonReutersandotherdatavendorsthroughelectronicmeansandthroughavarietyofinformationsources.InadditiontotheLIBORfixresultingfromthecalculation,ThomsonReuterspublisheseachContributorPanelbankssubmittedratesalongwiththenamesofthebanks

    FuturescontractssettleonIntl.MoneyMarketdates,3rd Wed.ofMarch,June,Sept.&Dec.Settlementpricecalculatedbylowestrate2daysprior(Monday)

    6

  • BIGGEST CASE EVER?BIGGESTCASEEVER?

    S b d hi k S E hibi A Somebodythinksso.SeeExhibitA

    OrIsIt?

    I i ? Isitazerosumgame?

    7

  • WHATISSIZEOFTHELIBORRELATEDMARKET?

    OTCderivativecontracts1st halfof2011:$554trillionshortterminterestratecontractstradedinLondon2011:$477trillion(241trillionrelatingto3monthEurodollar)

    MortgageMarketadjustableratemortgagescanberesettiedtoLIBORrate(Berkshire case)(Ex.B)

    BondMarket dividendratescanbetiedtoLIBOR(Gelboim case)(Ex.C)

    StockMarket preferreddividendratescanbetiedtoLIBOR(Lieberman case)(Ex.D)

    EurodollarfuturesonChicagoMercantileExchangein2011:$564trillion(ExchangeBasedPlaintiffAction)(Ex.E)

    Eurodollarfuturecontract:thecontractthatwouldbepaidonaEurodollardepositof$1millionforatermof3months.Settlementpriceof3monthcontractis100minus3month$LIBORonsettlementdatep $

    LIBORBasedDerivatives(Baltimore case)(Ex.F)

    AnysecuritytiedtoLIBORthatpaidanartificiallylowreturn(Schwab case nonclassaction)(Ex.G)

    Mortgage Market adjustable rate mortgages with LIBOR reset (Adams case) (Ex. H)MortgageMarket adjustableratemortgageswithLIBORreset(Adams case)(Ex.H)

    8

  • SMOKESMOKE

    April16,2008WSJArticle(Ex.I)(LIBORFog:BankersCastDoubtonKeyRateAmidCrisis)

    April28,2008WSJArticle(Ex.J)(LIBORSurgesAfterScrutinyDoesToo)

    May29,2008 BloombergArticle(Ex.L)(statingbankssubmittedlowerratestoavoidbadmarketperceptions)perceptions)

    May30,2008WSJAnalysis(Ex.K)

    April10,2008 CitibankReport(Ex.M)(statingLIBORattimesnolongerrepresentslevelatwhichbankst d l t th )extendloanstoothers)

    Feb.22,2009 LIBORleftinLimbo:ACallforMoreReform(Ex.U)

    April2,2010 Snider&Youle ArticleDoestheLIBORReflectBanksBorrowingCosts?(Ex.N)

    March18,2011 WSJArticleU.S.LIBORProbeIncludesBofA,Citi,UBS(Ex.O)

    9

  • FIREFIREUnitedStatesDepartmentofJusticeNonProsecutionAgreement(June26,2012)(ExhibitP)

    Penalty of $160 million dollarsPenaltyof$160milliondollars

    StatementofFacts

    DepartmentofJusticeAppendixA716,19:tradersaskedforahighersubmissiononLIBOR

    DepartmentofJusticeAppendixA1023:BarclaystraderscommunicatedwithotherContributorPanelBanksregardingLIBOR&EURIBOR

    DepartmentofJusticeAppendixA1228:BarclaystraderscommunicatedwithEURIBORcontributorbanks

    Department of Justice Appendix A 22 49: Barclays submitted low Yen & Sterling LIBOR rates DepartmentofJusticeAppendixA2249:BarclayssubmittedlowYen&SterlingLIBORrates

    BarclaysmadeLIBORandEurodollarsubmissionswhichtookintoaccountrequestsbyinterestratederivativestraders,includingtradersatotherbanks,motivatedbyprofit&tobenefitBarclaystradingpositionsfromJune2005toSeptember2007,andoccasionallythereafterthrough2009.(May2009)

    BarclaysattemptedtoinfluenceotherbankssubmissionsfromAugust2005throughMay2008

    8/07>1/09BarclaysmadeLIBORsubmissionswhichtookintoaccountnegativemediaperceptionsofBarclaysLIBORsubmissions(i.e. Barclayswashigherthanotherbanks&havingproblems)

    10

  • FINANCIALSERVICESAUTHORITYFINALNOTICE6/27/12(E hibit Q)(ExhibitQ)

    59 5 fine under Section 206 of Financial Services and Markets Act of 2000 59.5fineunderSection206ofFinancialServicesandMarketsActof2000 Settledearly 30%(Stage1)discount(fullpenaltywouldhavebeen85million)

    Findings:

    WhatsnotinDepartmentofJusticeSOF:

    1/05>6/10BarclayshadinadequateriskmanagementsystemsinrelationtoLIBORandEURIBORsubmissions

    Barclays internal compliance department failed to address issuesBarclay sinternalcompliancedepartmentfailedtoaddressissues

    TradersattemptedtoinfluencesubmissionsfromJanuary2005throughJuly2008(slightlydifferentthanDepartmentofJusticefindings)(8/05to5/08)

    f d l / / ( l h l d ff f f [ / Datesformediaperceptionclaims9/07to5/09(slightlydifferentfromDepartmentofJustice[8/07to1/09])

    TheWheatleyReviewofLIBOR(Aug.2012)(Ex.V) reportcommissionedbytheChancelloroftheExchequerp y q

    11

  • COMMODITYFUTURESTRADINGCOMMISSIONFINDINGS(ExhibitR)

    G ll f D f J i d Fi i l S i A h i GenerallysamefactsasDepartmentofJusticeandFinancialServicesAuthority

    12

  • COURTOFONTARIOORDER TO PRODUCE RECORDSORDERTOPRODUCERECORDS

    (May18,2011)(ExhibitS)

    Cooperating Party (Unnamed) CooperatingParty(Unnamed)

    DocumentsrequestedfromHSBC,RoyalBankofScotland,DeutscheBank,JPMorgan,andCitibank

    CooperatingPartystatedothersenteredintoagreementstosubmithighand/orlowLIBORYenbids

    13

  • ANOTHERCOUNTRYHEARDFROM:SINGAPOREJOINSTHEFRAY

    (ExhibitT)

    14

  • Antitrust Issues in Libor Litigation

    Daniel L. Brockettd b k @ i ldanbrockett@quinnemanuel.com

    212-849-7000

    December 12, 2012

  • Overview

    OvertwentyLiborrelatedactionshavebeenyconsolidatedbeforeJudgeBuchwaldintheSouthern District of New York.