RBS Sued for Wrongful Dismissal by Trader It Fired Over Libor Rate Setting
By Sanat Vallikappen and Netty Idayu Ismail – Jan 10, 2012 5:24 AM ET
Royal Bank of Scotland Group Plc was sued for wrongful dismissal by a former Singapore-based trader who said the bank accused him of improperly trying to influence the setting of London interbank offered rates.
Tan Chi Min said the British Bankers’ Association, which sets the Libor rate, gets input from 16 banks and he was in no position to influence the rate on his own. Tan sought to recoup $1.5 million in bonuses he claims he’s owed and 3.3 million RBS shares, according to the lawsuit filed last month in Singapore’s High Court.
RBS, Britain’s biggest government-owned lender, is co- operating with investigations by the U.S. Commodity Futures Trading Commission, the U.S. Department of Justice and the European Commission into whether Libor had been manipulated.
Apart from the regulators’ actions, investors have accused several banks represented on the Libor panel of distorting market prices by hiding true borrowing costs since as early as 2007. A series of lawsuits filed in 2011 are now winding their way through courts in Europe and the U.S.
Patricia Choo, a Singapore-based spokeswoman for RBS, declined to comment on Tan’s lawsuit. Suresh Nair, a lawyer representing Tan, also declined to comment.
Tan, the former head of delta trading for RBS’s (RBS) global banking and markets division in Singapore, said in his complaint that the bank failed to detail the allegations against him and didn’t specify how he had improperly influenced the setting of Libor for the yen.
It was his responsibility to provide input to the bank’s rate setters and it was common practice for other bank employees to make requests of them, Tan said in the lawsuit.
Libor rates are based on data from banks reflecting how much it would cost them to borrow from each other for various periods of time in currencies including dollars, euros and yen. The rates are compiled daily by Thomson Reuters Corp. for the British Bankers’ Association.
The benchmark determines interest rates on an estimated $360 trillion of financial instruments around the world, according to the Bank for International Settlements. The rate represents the average of the collected figures, minus several of the highest and lowest quotes.
The delta trading desks at investment banks handle trades for clients, typically helping them to speculate on, or hedge the performance of, a basket of securities.
The case is Tan Chi Min v The Royal Bank of Scotland Plc S939/2011 in the Singapore High Court.