Abstract

The ongoing LIBOR crisis could potentially prove to be one of the most significant legal and policy dilemmas of the financial crisis. Although considerable effort has been underway to reimagine the regulatory apparatus that oversees and administers the setting of LIBOR, much of the significant regulatory activity thus far has been retrospective – through legal proceedings. Particularly within the United States, civil litigation has begun to play a prominent role in this process. This paper surveys and assesses the major extant LIBOR-related civil lawsuits to date, ranging from antitrust to securities to fiduciary to contract to common law fraud. We conclude that many of these theories of liability are plausible, but that they will face considerable challenges either in establishing liability or in proving significant damages (or both). In the light of these limitations, we conclude that civil liability is not likely to provide sufficient deterrence benefits going forward, and that various forms of “ex ante” regulatory reform must play a central role.

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