A consortium of homeowners filed suit against Bank of America (BAC), Barclays, JPMorgan (JPM) and several other international banks this week, claiming the financial firms manipulated LIBOR rates that determine the interest rates homeowners pay on adjustable-rate mortgages.
The suit goes back to the scandal involving the London Interbank Offered Rate that generally serves as the benchmark for where rates sit on mortgages, credit cards, student loans and other loan products.
The homeowners who filed on behalf of similarly situated plaintiffs, claim that from 2000 through 2009, the banks helped seasonally manipulate LIBOR rates to force the payments on ARMs higher for homeowners impacted by interest-rate changes.
The case, which was filed in the U.S. District Court for the Southern District of New York, accuses the banks of fixing the LIBOR rates for financial gain in their respective roles as the key providers of the data.
The homeowners are suing the banks under the Sherman Act, a massive piece of financial legislation, and for allegedly violating the Racketeer Influence Corrupt Organization Act. The plaintiffs also say they want to prevent the banks from maintaining any type of monopoly situation where they can use price-fixing and other forms of collusion to make homeowners and those impacted by the rates pay more than necessary.
The case, which is titled Adams et al v. Bank of America Corp., involves several different homeowners who suggest they paid more interest on home loans because of faulty set Libor rates.
The case also accuses the banks of violating the New York Antitrust Statute and unjust enrichment.
The suit also claims there are numerous other entities and individuals not named in the complaint that played a role in the alleged rate fixing.