UBS manages to dismiss Sterling LIBOR manipulation lawsuit

UBS has managed to dismiss a Sterling LIBOR manipulation lawsuit brought against it by FrontPoint European Fund, L.P. at the New York Southern District Court. FrontPoint brought the putative antitrust class action lawsuit against UBS AG alleging that the bank conspired with other financial institutions to manipulate the London Interbank Offered Rate (LIBOR) for British Pound Sterling.

Earlier today, Judge Vernon S. Broderick of the New York District Court issued a Memorandum & Opinion dismissing the case. He ruled on FrontPoint’s motion to substitute Fund Liquidation Holdings, LLC (FLH), individually, and as assignee of and attorney-in-fact for FrontPoint, pursuant to Federal Rule of Civil Procedure 17(a)(3). He concluded that FLH may not be substituted into this lawsuit because FrontPoint, which had ceased operations several years ago, did not assign to FLH the right to bring either the Sherman Act claims or the common law unjust enrichment claim at issue in the case.

This action arises out of alleged manipulation and price fixing of the Sterling LIBOR by numerous financial institutions, which allegedly harmed purchasers and sellers of financial instruments that were in some way connected to LIBOR. In 2007, FrontPoint – a Delaware limited partnership – entered into swap transactions with UBS, the price of which was allegedly affected by UBS’s manipulation of Sterling LIBOR.

Notwithstanding the fact that FrontPoint had ceased operations in 2012, FrontPoint, along with Richard Dennis, filed a complaint against the defendants on January 21, 2016.

On April 11, 2016, the defendants moved to dismiss all claims against them for lack of personal jurisdiction, lack of subject matter jurisdiction, and failure to state a claim, which the plaintiffs subsequently opposed. On December 21, 2018, the Court dismissed all claims from the suit except for two: FrontPoint’s claims against UBS for violation of the Sherman Act and for unjust enrichment.

The battle then focused on who is the actual “live” plaintiff. FrontPoint and Sonterra acknowledged that both entities had long since ceased operations but asserted that, prior to doing so, they had each assigned and transferred their respective rights to bring the instant lawsuit to FLH. Accordingly, FrontPoint and Sonterra argued that substitution of FLH into the action, both individually and as assignee and attorney-in-fact for FrontPoint and Sonterra, would address any potential concerns relating to the fact that FrontPoint and Sonterra were “no longer in business.”

The Judge, however, did not agree with the plaintiffs’ arguments. In his Memorandum & Opinion, the Judge noted that the two surviving claims at issue in this litigation are the federal antitrust claim pursuant to the Sherman Act and the unjust enrichment claim under New York law. Although FrontPoint conclusorily asserts that “FLH is and always has been the real party in interest in this case,” a review of the APA reveals that FrontPoint did not transfer to FLH the right to sue on either of these claims, the Judge said.

Because the Judge concluded that FrontPoint did not assign the claims at issue in this litigation to FLH, FrontPoint’s motion to substitute was denied. Furthermore, since FrontPoint filed its certificate of cancellation prior to the commencement of this lawsuit, FrontPoint lacks capacity to maintain this lawsuit and the Court therefore grants UBS’s request that FrontPoint’s claims be dismissed in their entirety.

The case was terminated today, August 16, 2019.