SAN FRANCISCO — Cotchett, Pitre & McCarthy is staking a claim in the massive court battle over allegations that banks rigged the benchmark interest rate tied to trillions of dollars of loans and financial products worldwide.
Cotchett lawyers filed eight federal lawsuits Wednesday on behalf of municipalities and public entities in California, including San Mateo County, San Diego County, the city of Richmond and the East Bay Municipal Utility District.
Nanci Nishimura, principal at the Burlingame firm, said state entities invested billions of dollars in securities with interest rates tied to the London Interbank Offered Rate, or LIBOR, which is set daily by a British bank association based on the rates that member banks report they would pay to borrow money from other banks.
By artificially suppressing LIBOR, banks increased their own profits at the expense of institutional investors, she said.
“Public entities don’t often file lawsuits. They are typically the target of lawsuits,” Nishimura said, adding governments are “coming to understand they have been the target of a lot of scams.”
Nishimura slammed the self-reporting mechanism used to set LIBOR as opaque, unaccountable and “ripe for manipulation.” Additional complaints on behalf of governmental bodies in California are likely and could result in tens of millions of dollars in damages, she said.
The suits mark Cotchett’s entry into the heated multidistrict litigation over LIBOR, now totaling more than 30 cases coordinated in the Southern District of New York. Plaintiffs lawyers have estimated potential damages at more than a trillion dollars.
The suits filed Wednesday in San Francisco, San Diego and Los Angeles federal court are expected to be transferred to New York for pretrial proceedings.
Since being assigned to the actions, U.S. District Judge Naomi Reice Buchwald in Manhattan has appointed interim class counsel and stayed tag-along actions pending a ruling on motions to dismiss.
The suits have been fueled by admissions of wrongdoing from two banks as part of settlements with U.S. and international authorities. Most recently, UBS agreed to pay roughly $1.5 billion to resolve potential criminal and regulatory claims. Criminal charges were filed against two former UBS traders. In an earlier settlement deal, Barclays agreed to pay roughly $450 million.