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The Libor Scandal—What It Means for the Legal Community, Investors, Traders and Nstitute THE LIBOR SCANDAL—WHAT IT MEANS FOR THE LEGAL COMMUNITY, INVESTORS, TRADERS AND NSTITUTE I BORROWERS Prepared in connection with a Continuing Legal Education course presented at New York County Lawyers’ Association, 14 Vesey Street, New York, NY scheduled for December 6, 2012 Program Sponsor: NYCLA's Futures and Derivatives Committee CLE Program Co-sponsor: NYCLA's Securities and Exchanges Committee Program Chairs: Stuart Shroff, Esq. and Blair H. Wallace, Och-Ziff Capital Management Group FACULTY: Jonathan Ching, Jones Day Gordon Eng, SKY Harbor Capital Management LLC Susan E. Foster, Perkins Coie NYCLA This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 2.5 Transitional and Non-Transitional credit hours; 1.5 Professional Practice; 1 Ethics. This program has been approved by the Board of Continuing Legal education of the Supreme Court of New Jersey for 2.5 hours of total CLE credits. Of these, 1 qualify as hours of credit for ethics/professionalism, and 0 qualify as hours of credit toward certification in civil trial law, criminal law, workers compensation law and/or matrimonial law. ACCREDITED PROVIDER STATUS: NYCLA’s CLE Institute is currently certified as an Accredited Provider of continuing legal education in the States of New York and New Jersey. Information Regarding CLE Credits and Certification The LIBOR Scandal December 6, 2012 6:00 PM to 8:05PM The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution. i. You must sign-in and note the time of arrival to receive your course materials and receive MCLE credit. The time will be verified by the Program Assistant. ii. You will receive your MCLE certificate as you exit the room at the end of the course. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium. iii. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate. iv. Please note: We can only certify MCLE credit for the actual time you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. Again, if it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week. v. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly, unless you can provide verification of course completion. Your certificate will be mailed to you within one week. Thank you for choosing NYCLA as your CLE provider! New York County Lawyers’ Association Continuing Legal Education Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646 The LIBOR Scandal -- What It Means for the Legal Community, Investors, Traders and Borrowers December 6, 2012 6:00 PM - 8:05PM Program Sponsor: NYCLA's Futures and Derivatives Committee Program Co-sponsor: NYCLA's Securities and Exchanges Committee Program Chairs: Stuart Shroff, Esq. and Blair H. Wallace, Och-Ziff Capital Management Group AGENDA 5:30 PM – 6:00 PM Registration 6:00 PM – 6:05 PM Introductions and Announcements 6:05 PM – 6:35 PM Liabilities and Potential Recoveries Susan E. Foster, Perkins Coie 6:35 PM – 7:05 PM Ethical Considerations Gordon Eng, SKY Harbor Capital Management LLC 7:05 PM – 7:35 PM Future Reform of the Rates Underlying Futures, Derivatives and Loans Jonathan Ching, Jones Day 7:35 PM – 8:05 PM Questions and Answers Panel New York County Lawyers’ Association Continuing Legal Educatio n Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646 The LIBOR Scandal -- What It Means for the Legal Community, Investors, Traders and Borrowers December 6, 2012 6:00 PM - 8:05PM Program Sponsor: NYCLA's Futures and Derivatives Committee Program Co-sponsor: NYCLA's Securities and Exchanges Committee Program Chairs: Stuart Shroff, Esq. and Blair H. Wallace, Och-Ziff Capital Management Group Table of Contents Barclays Non-Prosecution Agreement Barclays Statement of Facts Complaint: City Council of Baltimore The Wheatley Review of LIBOR Ethics Hypothetical Applicable Rules of Professional Conduct Applicable CFR Sections Public Statement by SEC Official: Letter Regarding Washington State Bar Association's Proposed Opinion on the Effect of the SEC's Attorney Conduct Rules Applicable SEC CFR Sections Applicable Securities and Exchange Act of 1934 Sections ABA Letter Re Preserving the Attorney-Client Privilege and the Lawyer’s Existing Duty to Maintain Client Confidentiality in the Commission’s Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934; File No. S7-33-10; Release No. 34-63237 Statement by SEC Commissioner: Adoption of Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934 Applicable Statutes Title 18 The LIBOR Scandal – What it Means for the Legal Community, Investors, Traders and Borrowers, by Jonathan Ching, Jones Day Faculty Biographies federal antitrust law against the Defendants identified below (collectively, “Defendants”) arising from their manipulation of the London InterBank Offered Rate (“LIBOR”) from on or before August 9, 2007 through at least February 2009 (the “Class Period”). 2. The Baltimore Plaintiffs’ claims are made on information and belief (except as to allegations specifically pertaining to the Baltimore Plaintiffs and their counsel, which are made on personal knowledge) based on the investigation conducted by and under the supervision of the Baltimore Plaintiffs’ counsel. That investigation included reviewing and analyzing information concerning Defendants and LIBOR that the Baltimore Plaintiffs (through their counsel) obtained from, among other sources: (i) analyses by consulting experts engaged by plaintiffs in these coordinated proceedings; (ii) publicly available press releases, news articles, and other media reports (whether disseminated in print or by electronic media); (iii) filings Defendants made with the United States Securities and Exchange Commission (“SEC”); (iv) court documents submitted in LIBOR-related proceedings in Canada, Singapore, and Japan; and (v) scholarly literature concerning the potential manipulation of LIBOR during the Class Period. Additionally, pursuant to the Antitrust Criminal Penalty Enhancement and Reform Act (Pub. L. No. 108-237, tit. II, 118 Stat. 661, 665, extended by Pub. L. No. 111-190, 124 Stat. 1275), the conditional leniency applicant to the United States Department of Justice has commenced providing cooperation to the Baltimore Plaintiffs and is expected to continue doing so. Those sources collectively support the Baltimore Plaintiffs’ allegations that Defendants collusively and systematically suppressed LIBOR during the Class Period so that the interest rates on LIBOR- based instruments that the Baltimore Plaintiffs purchased during that time were lower than they otherwise would have been absent Defendants’ misconduct. 3. Except as alleged in this Complaint, neither the Baltimore Plaintiffs nor other 973672.6 -2- members of the public have access to the underlying facts relating to Defendants’ improper activities. Rather, that information lies exclusively within the possession and control of Defendants and other insiders, which prevents the Baltimore Plaintiffs from further detailing Defendants’ misconduct. Moreover, numerous pending government investigations—both domestically and abroad, including by the United States Department of Justice (“DOJ”), the Commodity Futures Trading Commission (“CFTC”), and the SEC—concerning potential LIBOR manipulation could yield information from Defendants’ internal records or personnel that bears significantly on the Baltimore Plaintiffs’ claims. Indeed, as one news report observed in detailing U.S. regulators’ ongoing investigation, “[i]nternal bank emails may prove to be key evidence . because of the difficulty in proving that banks reported borrowing costs for LIBOR at one rate and obtained funding at another.”1 The Baltimore Plaintiffs thus believe further evidentiary support for their allegations will come to light after a reasonable opportunity for discovery. NATURE OF THE ACTION 4. This case arises from a global conspiracy to manipulate LIBOR—the reference point for determining interest rates for trillions of dollars in financial instruments worldwide—by a cadre of prominent financial institutions. 5. Defendants, the banks that comprised the U.S. dollar LIBOR panel during the Class Period (as defined below), were motivated to suppress LIBOR for two primary reasons. First, well aware that the interest rate a bank pays (or expects to pay) on its debt is widely, if not universally, viewed as embodying the market’s assessment of the risk associated with that bank, Defendants understated their borrowing costs (thereby suppressing LIBOR)
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