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Home Uncategorized

Second Circuit affirms dismissal of LIBOR manipulation claims

October 1, 2025
Reading Time: 2 mins read
CFPB issues interim final rule for Libor transition

LIBOR
Sonterra Capital Master Fund LTD. v. UBS AG
Date: Sept. 15, 2015

Issue: Whether global banks violated the Sherman Act and Commodity Exchange Act (CEA) by conspiring to manipulate the London Interbank Offer Rate (LIBOR).

Case Summary: A unanimous Second Circuit panel affirmed the dismissal of a lawsuit accusing UBS AG and other global banks of conspiring to manipulate LIBOR, ruling the plaintiffs failed to show they actually lost money from the alleged scheme.

LIBOR set the global benchmark for interest rates by reflecting the rates at which major banks borrowed from each other, and it guided pricing for loans, mortgages, and derivatives until regulators phased it out in 2024.

In 2015, Richard Dennis, Sonterra Capital Master Fund Ltd., and FrontPoint European Fund LP sued several global banks in the Southern District of New York, alleging they conspired to manipulate the Sterling LIBOR rate to boost profits from Sterling LIBOR-based derivatives. Plaintiffs alleged bank traders sent electronic messages to their LIBOR-submission teams instructing them to report false Sterling LIBOR quotes, adjusting the rates upward or downward depending on their trading positions. They also alleged that the banks facilitated this misconduct by implementing policies that encouraged collusion, reorganizing their structures to allow traders easy communication with LIBOR submitters, and adopting weak compliance standards.

The district court dismissed the lawsuit, ruling that Dennis and Sonterra lacked antitrust standing. The court also held that FrontPoint no longer had the capacity to litigate and had not assigned its claims to a substitute. Finally, the court found that Dennis failed to plead specific intent to support his CEA claims. Plaintiffs appealed the district court’s decision.

On appeal, the panel affirmed, holding that plaintiffs failed to allege actual injury under the Sherman Act or CEA. Section 4 of the Clayton Act permits damages only for those who suffer a “special type of antitrust injury” and qualify as efficient enforcers. Courts apply a three-step test: identify the anticompetitive practice, show actual injury, and link the injury to the alleged effects. In the panel’s view, plaintiffs failed at step two. Though they claimed banks colluded to set artificial prices, they did not identify specific transactions where manipulation caused them financial harm. The panel emphasized that even if rates were distorted, plaintiffs never showed how their derivative contracts actually produced losses.

The panel also ruled that plaintiffs’ CEA claims failed because they did not show actual damages. To state a valid CEA claim, plaintiffs must plausibly allege that they transacted in at least one commodity contract at a price distorted by manipulation and that the distortion harmed them. Plaintiffs only alleged that Dennis traded in a market where prices were sometimes artificial, without identifying any specific transaction in which he lost money due to Defendants’ scheme. Further, the panel explained that Dennis failed to establish the overall effect of the alleged manipulation was not neutral or even beneficial to him.

Bottom Line: The panel affirmed the dismissal based on plaintiffs’ lack of injury and explained that it “took a more direct road to the same result.” Thus, the panel did not address any other issue.

Documents: Opinion

Tags: Banking Docket
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