The trial in the eagerly anticipated case of the Property Alliance Group Ltd v. The Royal Bank of Scotland commenced in the High Court (Financial List) earlier this week.
RBS is defending a multi-million-pound claim from Property Alliance Group (PAG) which alleges that it was mis-sold interest rate hedging products (IRHPs) linked to three-month LIBOR between 2004 and April 2008.
The case has received widespread media and market attention given that it is the first civil claim involving allegations of LIBOR manipulation to proceed to a hearing and the Court is likely to hear compelling and vigorously contested evidence/submissions in this regard, especially in light of Mr Justice Birss’ judgment on an interlocutory matter in November 2015, in which he stated that there are documents which:
“show that, arguably, members of the RBS board were aware that LIBOR was “broken” during a period in which RBS was selling swaps to PAG referable to LIBOR….there is evidence from which a properly arguable inference can be drawn that knowledge of serious problems with LIBOR existed at a senior level inside the bank. The issues raised in this action do not only concern the RBS trading floor, they concern top management with overall responsibility for LIBOR and for swaps. Based on the material relied on by PAG, the bank needs to account for the activities of its senior staff as well as the actions on the trading floor.”
The case also raises distinct issues surrounding the activities of the bank’s now infamous Global Restructuring Group (GRG) (click here for further information), to which PAG was moved in May 2010. PAG contends that it did not require financial restructuring and that the Tomlinson Report (into the activities of the GRG) shows that the bank unnecessarily engineered defaults to this end.
Other claimants will be watching with great interest as the case, which is scheduled to last until late July, continues.
For more information on LIBOR manipulation, please contact Michael Sparkes on 020 7242 8018 or firstname.lastname@example.org.