EUROPE - International law experts have said a number of claims could be brought forward should a manipulation of the interbank lending rate LIBOR be proven, but they also acknowledged that evidence was still lacking.
In his opening remarks at a recent LIBOR workshop in Vienna, David Doble of London-based David Doble Solicitors said: "This is a case that is only slowly divulging its secrets and is currently offering more questions than answers."
Together with fellow solicitors from the UK, the US and Austria, Doble outlined possible claims - ranging from antitrust and breach of contract to securities fraud and breach of fiduciary duty - that institutional investors could bring forward if they felt they had been damaged by the alleged manipulation of LIBOR.
However, Doble took pains to point out that there was as yet "no evidence" that any bank had been "successful" in manipulating the interbank lending rate.
"Most of what the FSA in the UK or the Department of Justice in the US have found is not yet in the public domain," he added.
He said he didn't know whether they would ever fully disclose their findings, as this might impair criminal prosecutors' ability to do their jobs, or give rise to further claims.
But he said he anticipated new information to arise from ongoing proceedings including a case against RBS in Singapore, as well as the European Commission's paper on benchmarks and rates, which Doble expects to be published shortly.
In the US, some investors have already tried their luck. One pension fund in Connecticut filed an anti-trust claim against the panel of banks determining the LIBOR rate, according to Bruce Grace of Lewis Baach PLLC in Washington.
Marcus Rutherford of London-based Enyo Law said European pension funds were "much more cautious" when it came to filing such lawsuits.
He added that many were "waiting for someone else to take the first step".
All the lawyers in the session also pointed out that the manipulation may not have affected some investors negatively, as some might also have profited from it.
This, they said, would have to be disclosed in detail should any lawsuit be brought forward, further complicating the issue.
Doble presented calculations on the possible extent of the losses suffered by holders of an interest rate knockout based on a hypothetical 15-year interest rate swap.
If the rate was successfully manipulated to fall below the trigger point X on any reset date, the losses suffered each year would accumulate to almost $300m (€233m) after year 15, he estimated.
Doble added that the impact on other products without a knockout trigger would be much less pronounced.
He pointed out that interest rate swaps made up between one-half and two-thirds of the global market of LIBOR-related products, which amounts to approximately $300trn dollars, according to the Wheatley report.