Litigation firm Cotchett Pitre & McCarthy – which has offices in San Francisco, Sacramento and Los Angeles – filed actions earlier this week on behalf of local government bodies including San Mateo County, San Diego County, the city of Richmond and the East Bay Municipal Utility District.

Artificial suppression

The firm’s principle, Nanci Nishimura, told The Recorder newspaper that public authorities in California invested billions of dollars in securities with interest rates tied to the London Interbank Offered Rate (Libor), but by allegedly artificially suppressing the rates, banks increased their own profits at the expense of their investors.
‘Public entities don't often file lawsuits. They are typically the target of lawsuits,’ said Ms Nishimura, adding governments are ‘coming to understand they have been the target of a lot of scams.’

Ripe for manipulation

Ms Nishimura – whose firm specialises in antitrust, price fixing and whistleblower issues – also slated the self-reporting mechanism used to set the rates as ‘ripe for manipulation’.
The suits are expected to be transferred to New York for pre-trial proceedings.

The California actions emerged just before reports today from London that the Royal Bank of Scotland is expecting to face US and UK fines of several hundreds of millions of dollars for its involvement in the Libor scandal. The BBC reports the bank is currently in the middle of negotiations with regulators on both sides of the Atlantic, and the betting is that the predominently state-owned bank will have to cough up more than the £290 million in fines paid by rival Barclays.