Solow sues banks for manipulating LIBOR
Continuing his penchant for legal battles, Sheldon Solow has sued a myriad of banks including Citigroup, JPMorgan Chase and Bank of America for alleged manipulations of the LIBOR rate that caused him to lose $100 million, Bloomberg News reported.
In a complaint filed Wednesday, Solow-led 7 West 57th Street Realty Co. accused the banks of reporting false rates at which the banks themselves could borrow. These rates, reported to the British Bankers Association, helped lead to an “artificial” London Interbank Offered Rate (LIBOR) that affected trillions of dollars worth of transactions including bank loans and municipal bonds.
The complaint alleges that Solow pledged a high-grade $450 million portfolio of municipal bonds as collateral for LIBOR denominated loans. Based on the artificial rates, Citigroup claimed that Solow’s security was inadequate, declared a default, and subsequently sold the collateral at “artificially low prices,” the complaint alleges. Solow’s company claims these manipulations led to him having to pay a judgment in excess of $100 million, and is accusing the banks of racketeering, violating federal antitrust laws, and breaching a state law pertaining to the free exercise of commerce.
The banks declined to comment on the suit to Bloomberg News. Solow’s attorney Andrew Hayes told Bloomberg News that the suit would focus solely on LIBOR claims.
In January, the federal appellate court upheld the dismissal of Solow’s securities fraud suit against Citigroup. Later that month, Solow executed one of the largest land deals in years with the sale of a $172 million parcel of land overlooking the East River to JDS Development (first reports said the amount was $200 million). [Bloomberg News] —Hiten Samtani