Freddie Mac, in its suit against more than a dozen banks for their alleged role in the “most costly commercial banking scandal in history,” is relying on a half-dozen attorneys from Dickstein Shapiro to handle the case.
Dickstein’s D.C. managing partner, Richard Leveridge, is leading a team of attorneys in Freddie Mac’s suit against the banks that stand accused of manipulating the London Interbank Offered Rate, or LIBOR, an interest-rate swaps and loans benchmark rate tied to trillions of dollars in financial systems throughout the world. It has been widely reported that Freddie Mac and Fannie Mae and incurred combined losses of about $3 billion as a result of the LIBOR manipulation.
Dickstein spokeswoman Michelle Rodgers forwarded requests for comment to Freddie Mac. A Freddie Mac spokesman spoke of Dickstein’s role, and the need for the agency to maximize financial recoveries.
“As you know, we are in conservatorship under the [Federal Housing Finance Agency] and we have an obligation to minimize cost to the U.S. taxpayer, which includes maximizing recoveries where that is applicable,” said Freddie Mac spokesman Tom Fitzgerald.
Related cases over LIBOR, including a nationwide class claims against Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co., and others, have been pending since 2011 in multidistrict litigation before U.S. District Judge Naomi Reice Buchwald in Manhattan.
But after consulting with Dickstein attorneys, Freddie Mac decided to file its own claims, Fitzgerald said. “We have worked closely with outside counsel, Dickstein Shapiro, and we have determined that there are gaps in the class-action with respect to Freddie Mac’s individual claims,” he said.
The 65-page complaint, filed March 14 in the Eastern District of Virginia, accuses the banks of jointly suppressing the U.S. Dollar LIBOR in an effort to hide their respective financial problems and boost profits.
Other Dickstein attorneys working on the case include partners James Robertson Martin, Jennifer Duncan Hackett and Jay Fastow and associates Aja Sae-Kung and Lisa Marie Kaas. All the attorneys, with the exception of Fastow who resides in the firm’s New York office, are based in Washington.
Leveridge has carved a niche in representing corporate clients who were victims of illegal price-fixing. He is currently representing a group of eleven clients in a suit against a group of polyurethane manufacturers that allegedly conspired to fix the price of the chemical.
According to the complaint, Freddie made numerous transactions reliant upon the U.S. Dollar LIBOR, including thousands of pay-fixed swaps that held billions of dollars in mortgage-backed securities. Freddie Mac learned of the LIBOR manipulation in June of last year, when Barclays entered into a non-prosecution agreement with the Department of Justice and a settlement with the U.S. Commodity Futures Trading Commission. Barclays admitted that “it knowingly and intentionally submitted false and dishonest LIBOR submission to BBA.”
Since news of the scandal broke, federal regulators have extracted a combined $2.5 billion from Barclays, UBS and, most recently, The Royal Bank of Scotland. In its complaint, Freddie did not specify the amount of damages it is seeking.
“We believe Freddie Mac’s damages from the alleged labor manipulation are substantial, but the amount is still to be determined,” Fitzgerald said.