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CalSTRS lawsuit vs. 2 banks on EURIBOR manipulation continues; other suits dismissed

CalSTRS can move ahead with a federal lawsuit against Citigroup and J.P. Morgan Chase over alleged manipulation of the benchmark European Interbank Offered Rate, or EURIBOR, and its related derivatives.

U.S. District Court Judge Kevin Castel in New York on Tuesday dismissed claims from four other plaintiffs that had been in a class action against the two banks as well as Barclays, Credit Agricole, Deutsche Bank, HSBC, Rabobank, Royal Bank of Scotland and Societe Generale.

Only the $196.4 billion California State Teachers' Retirement System, West Sacramento, and FrontPoint Australian Opportunities Trust, managed by FrontPoint Partners, transacted directly with defendants in the lawsuit, Mr. Castel said. The class action had claimed the banks violated antitrust laws by manipulating the rate.

CalSTRS and FrontPoint, “the two direct counterparties to transactions with the remaining defendants,” can pursue one antitrust claim and two common-law claims against Citigroup and J.P. Morgan Chase, Mr. Castel wrote in his ruling.

“For transactions in which CalSTRS or FrontPoint Australian were counterparties with a remaining defendant who is alleged to have engaged in price fixing, the court concludes that these two plaintiffs satisfy the efficient enforcer requirements of antitrust standing,” he wrote.

For the other plaintiffs, Mr. Castel said that more than $4 billion in penalties from European and U.S. regulators have already been assessed against the banks over EURIBOR manipulation. “Given the lack of direct dealings by four of the six plaintiffs, the nature of the market, the vast size of the umbrella claims and the significant risk of 'overkill'-type damages, the existence of governmental enforcement actions are afforded some weight,” Mr. Castel said.

Citibank spokesman Robert Julavits and J.P. Morgan Chase spokeswoman Jessica Francisco said their firms declined to comment.

Officials at CalSTRS could not be reached for comment.