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Banks Face Billions of Dollars of Claims after Barclays Settles

The British bank is already named as a defendant in various class actions around the world, where investors are seeking compensation for buying financial instruments based on a Libor benchmark that was allegedly manipulated.

One of the biggest class-actions claims has been filed in New York by the Mayor and City Council of Baltimore and the City of New Britain Firefighters and Police Benefit Fund.

Barclays is named as one of around 20 defendants, which also include Royal Bank of Scotland and HFSBC, as well as US lenders Bank of America, Citigroup and JP Morgan.  The action is coordinated with five other lawsuits, including a claim by discount brokerage Charles Schwab against 11 banks, including Barclays.

The sums involved are potentially vast.  Libor is used to price various financial products.  The Bank for International Settlements calculates that the market for over-the-counter interest rate derivatives, such as swaps, had a notional value of more than $500 trillion in 2011.  Just a small element of proven mispricing could trigger billions of dollars of claims.

Michael Hausfeld, chairman of Hausfeld LLP -- one of two law firms leading the Baltimore class action -- told The Daily Telegraph that the potential damages claims banks faced: "I think it's far bigger ethan many people thought originally."

(To read the entire article, click here.)

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Practice Areas: Securities and Financial Services

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