HSBC agreed to pay $100 million to settle an antitrust lawsuit by over-the-counter investors, including the city of Baltimore and Yale University, who claimed they were harmed when they bought securities tied to rigged Libor.
The proposed settlement by the London-based bank follows similar agreements the investor group reached with Barclays, Citigroup, and most recently Deutsche Bank over similar allegations. The settlement will need to be approved by a federal judge in Manhattan.
The investors claimed that beginning in 2007 HSBC colluded with other banks to depress the Libor rate to minimize the amount the firms had to pay out on investments tied to the rate. Libor-linked investments included asset swaps, collateralized debt obligations and forward-rate agreements.
The investors said in their request for preliminary approval on Thursday that the deal is substantially fair given the hurdles they would face to get a favorable jury verdict in the six-year-old case that's currently before an appeals court.
"This litigation presents the court, the parties, and eventually, a jury, with the task of understanding extremely complex derivative instruments in an opaque, unregulated market," according to the court filing. "This makes proving liability and damages, both of which would have required the assistance of experts, all the more risky."
About a dozen firms have paid almost $9 billion in fines to resolve government investigations around the world into rigging of the key benchmark. Libor is used to set interest rates every business day for myriad financial instruments.
The investors' antitrust claims were reinstated by a court of appeals in 2016 after a trial judge had dismissed them. The claims against HSBC and some of the other banks were dismissed a second time on jurisdictional grounds, which is the subject of the pending appeal.
"We are pleased the matters are resolved," HSBC said in an emailed statement.
The case is In Re: Libor-Based Financial Instruments Antitrust Litigation, 11-md-02262, U.S. District Court, Southern District of New York (Manhattan).
