Alabama Homeowners File Suit for Rigged Rates in LIBOR Scandal

Five homeowners based in Alabama filed a class action suit against a group of 12 financial institutions, including Bank of America Corporation, Barclays Bank, and Citigroup, claiming the interest rates for their adjustable rate mortgages (ARMs) were raised as result of the rigged London Interbank Offered Rate (LIBOR).

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The lawsuit alleges violations of federal antitrust, racketeering, breach of contract, and other claims against the banks arising from the manipulation of LIBOR from January 2000 through at least February 2009, according to the complaint, which was filed in Manhattan federal court.

LIBOR is used by financial institutions as a benchmark to set rates. LIBOR is calculated for 10 currencies and determines rates based on what London banks say they would be charged if they were to borrow from other banks during certain time periods.

In late June, Barclays reached a settlement with British and U.S. authorities and agreed to pay 290 million pounds for manipulating LIBOR rates based on requests from traders.

According to an ""article from the Financial Times"":http://www.ft.com/intl/cms/s/0/6b912248-1496-11e2-8cf2-00144feabdc0.html#axzz29UWPBqPf, the attorney representing the homeowners, John Sharbrough, said the plaintiffs lost thousands of dollars each, and the number of plaintiffs could reach 100,000. The Financial Times also reported the lead plaintiff, Annie Bell Adams, lost her home to foreclosure.

Other defendants named in the case, _Adams et al. v. Bank of America Corp._, were Rabobank, Credit Suisse, Deutsche Bank, HSBC, JP Morgan Chase, Lloyds Banking, Royal Bank of Canada, Royal Bank of Scotland, and UBS.