Overview
As part of the ongoing LIBOR litigation (previous coverage here), Judge Buchwald dismissed yesterday claims brought by student loan borrowers claiming that LIBOR manipulation both constituted fraud and ran afoul of state laws preventing banks from controlling a floating interest rate. Judge Buchwald held that the student loan plaintiffs could not show that lenders had made any representation regarding LIBOR, or that the manipulation had increased their interest rates:
The Student Loan Plaintiffs’ complaint fails to allege with particularity any representation by the issuers regarding the nature of LIBOR. Likewise, the loan documents submitted by plaintiffs do not make any representation regarding LIBOR. Under Rule 9(b), this is enough to warrant dismissal of the fraud claim. Furthermore, the complaint fails to allege that any manipulation increased plaintiffs’ loan payments. Persistent suppression (which the complaint actually fails to allege) would not have increased plaintiffs’ payments, and no incident of trader based inflation is offered as a source of damages.Judge Buchwald also dismissed claims by a putative new class of lending institutions, who held loans with interest rates tied to LIBOR.