Big banks settle lawsuit

The banking heavyweights included in the settlement are Bank of America, JP Morgan, Credit Suisse and Deutsche Bank, as well as Royal Bank of Scotland, Credit Suisse and Citigroup.

They agreed to pay a total of $324 million (281 million euros), with JP Morgan covering the biggest chunk of $52 million to be followed by Deutsche Bank, Bank of America, Credit Suisse and RBS paying $50 million each.

The banks were suspected of agreeing among themselves between 2009 and 2012 to set the daily benchmark rate for interest rate exchange contracts, or swaps.

US District Judge Jesse Furman on Tuesday rejected the banks' motion to dismiss the suit, saying the claims were similar to those made against some of the same banks involving manipulation of the London interbank offered rate, or Libor.

"It appears that that sort of rate manipulation can be economically sensible and feasible given that many banks have admitted that in approximately the same period of time, they conspired to fix similar benchmark rates - namely, Libor and the leading benchmark interest rate for the foreign exchange market in order to maximize profits," Furman was quoted as saying by the plaintiffs' lawyers.

The plaintiffs, including financial investors and derivatives traders, charged the banks used to make multiple electronic orders just before setting the rate and delaying other ongoing operations that had been made at different rates.

"We are very pleased that these banks are offering our clients hundreds of millions of dollars in recovery," said David Scott, a lawyer for the plaintiffs.

The settlement covers only seven banks out of a group of 15 financial institutions named in the lawsuit. They include BNP Paribas, Goldman Sachs, HSBC and Morgan Stanley among others.

Scott said the plaintiffs would continue to "vigorously pursue relief from the remaining defendants," for which Tuesday's settlement provided substantial support.

uhe/jd (Reuters, AFP)