Case 1:11-cv-06411-NRB Document 1 Filed 08/23/11

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

CHARLES SCHWAB BANK, N.A.;CHARLES SCHWAB & CO., INC.; and THE CHARLES SCHWAB CORPORATION,
Plaintiffs

v.

BANK OF AMERICA CORPORATION; BANK OF AMERICA, N.A.; CREDIT SUISSE GROUP AG; J.P.MORGAN CHASE & CO.; HSBC HOLDINGS PLC; BARCLAYS BANK PLC; LLOYDS BANKING GROUP PLC; WEST LB AG;UBS AG; ROYAL BANK OF SCOTLAND GROUP PLC; DEUTSCHE BANK AG; CITIGROUP, INC. CITIBANK, N.A.; DEUTSCHE BANK SECURITIES; BANC OF AMERICA SECURITIES, LLC; CREDIT SUISSE SECURITIES (USA) LLC.; UBS FINANCIAL SERVICES INC.; J.P.MORGAN SECURITIES INC.;CITIGROUP GLOBAL MARKETS INC.;CITIGROUP FUNDING, INC.; RBS SECURITIES INC. (F/K/A GREENWICH CAPITAL MARKETS, INC.); BANK OF SCOTLAND PLC; CREDIT SUISSE HOLDINGS (USA) INC;CHASE BANK USA; JPMORGAN CHASE BANK NA;JP MORGAN SECURITIES LLC; HSBC BANK USA;HSBC FINANCE CORPORATION;HSBC SECURITIES (USA) INC;BARCLAYS US FUNDING CORP; LLOYDS TSB BANK PLC;UBS FINANCE (DELAWARE) INC;UBS FINANCIAL SERVICES INC;UBS SECURITIES LLC; DEUTSCHE BANK FINANCIAL LLC;CITIZENS BANK, NA; CITIZENS BANKOF MASSACHUSETTS; CITIZENS BANK OF PENNSYLVANIA; and RBS CITIZENS, NA,
Defendants.

Plaintiffs Charles Schwab Bank, N.A., Charles Schwab & Co., Inc., and TheCharles Schwab Corporation (“Plaintiffs”), by their counsel, allege as follows:

NATURE OF THE ACTION

1.

This case arises from ongoing manipulation of the London Interbank Offered Rate (“LIBOR”) by a cadre of prominent financial institutions. Beginning in 2007 and continuing approximately until the announcement of government investigations and subpoenas in March2011 (the “Relevant Period”), Defendants (identified below) purported to report to the British Bankers’ Association (“BBA”) the actual interest rates they paid on funds they borrowed from other financial institutions—i.e., their true “costs of borrowing”—on a daily basis. The BBA then relied on the false information Defendants provided to set LIBOR, a benchmark set of interest rates used to price trillions of dollars’ worth of financial instruments worldwide. By acting together and in concert to knowingly understate to the BBA their true costs of borrowing,Defendants caused LIBOR to be set artificially low.

Defendants perpetrated their fraudulent scheme and conspiracy to artificially depress LIBOR as a means to pay lower interest rates on interest-bearing financial instruments and securities paying returns based on, tied to, bench marked or indexed to LIBOR (collectively,“LIBOR-based instruments and securities”) that Defendants sold to investors, including Plaintiffs.Specifically, Defendants misrepresented, in connection with numerous offerings of LIBOR-based instruments and securities during the Relevant Period, that the interest rates investors would receive on the subject LIBOR-based instruments and securities were based on LIBOR, when infact Defendants were actively working together to ensure LIBOR was set at artificially low rates.Thus surreptitiously bilking investors of their rightful rates of return on their investments,Defendants reaped hundreds of millions, if not billions, of dollars in ill-gotten gains.Defendants—in the debt securities context, the borrowers—have been cheating investors—the lenders—out of interest payments for years. Moreover, by understating their true costs of borrowing, Defendants provided a false or misleading impression of their financial strength to investors.

[…]

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