UPDATE 2-Libor antitrust claims are revived in setback for banks

(Adds details from decision, comments by judge and professors,
background, case citation, byline)
By Jonathan Stempel
NEW YORK, May 23 (Reuters) - A U.S. appeals court on Monday
revived a civil lawsuit accusing major banks of conspiring to
manipulate the Libor benchmark interest rate, in a big setback
for their defense against investors' claims of market-rigging.
The 2nd U.S. Circuit Court of Appeals in Manhattan said a
lower court judge erred in dismissing the antitrust portion of
private litigation against Deutsche Bank AG DBKGn.DE , UBS AG
UBSG.S , Bank of America Corp (NYSE:BAC) BAC.N and 13 other banks on the
ground that the investors failed to allege harm to competition.
"Appellants sustained their burden of showing injury by
alleging that they paid artificially fixed higher prices,"
Circuit Judge Dennis Jacobs wrote for a three-judge panel.
Libor, or the London Interbank Offered Rate, underpins
hundreds of trillions of dollars of transactions and is used to
set rates on credit cards, student loans and mortgages. It is
calculated based on submissions by banks that sit on panels.
In litigation that began in 2011, investors accused big
banks of suppressing Libor during the financial crisis to boost
earnings or make their finances appear healthier.
The decision could help investors in several other lawsuits
in Manhattan seeking to hold banks liable for alleged
price-fixing in bond, commodity, currency, derivatives, interest
rate and other financial markets.
"It strengthens the hand of investors in other price-fixing
cases based on benchmarks that were reached in collaborative, or
outright collusive, arrangements," said Lawrence White, a
professor at New York University's Stern School of Business.
Thomas Goldstein, a lawyer who argued the investors' appeal,
was not immediately available for comment. Robert Wise, a lawyer
who argued on the banks' behalf, declined to comment.
Some of the other banks that were sued are Barclays Plc
BARC.L , Citigroup Inc (NYSE:C) C.N , Credit Suisse (SIX:CSGN) Group AG CSGN.VX ,
HSBC Holdings Plc HSBA.L , JPMorgan Chase & Co (NYSE:JPM) JPM.N , Royal
Bank of Canada RY.TO , Rabobank BA RABOY.UL , Royal Bank of
Scotland Group Plc RBS.L and Societe Generale SOGN.PA .
Monday's decision overturned a March 2013 dismissal by U.S.
District Judge Naomi Reice Buchwald in Manhattan of what she has
called a "substantial portion" of the litigation, including
federal antitrust claims that could justify triple damages.
"It means the court is entitled to look under the hood,"
said Herbert Hovenkamp, an antitrust professor at the University
of Iowa Law School. "The district judge got it wrong by adopting
a categorical rule that because the banks were cooperating in
setting Libor they could not be violating antitrust rules."
Authorities worldwide have levied roughly $9 billion of
fines against banks and brokerages to settle Libor rigging
probes, including penalties of $2.5 billion against Deutsche
Bank and $1.5 billion against UBS.
The case is Gelboim et al v. Bank of America Corp et al, 2nd
U.S. Circuit Court of Appeals, No. 13-3565.