The headlines initially concerned the banks and, more recently, a tidal wave of investor claims. Yet to surface in London – but bound to do so – are the legal ramifications of the LIBOR scandal for bank employees.
In Singapore, however, it has already kicked off. An employee, sacked by RBS for his involvement in setting LIBOR rates, has sued for wrongful dismissal. Part of his claim is to assert that that in RBS senior employees commonly made requests to their LIBOR-setting bankers as to the “appropriate rate”.
As the fall-out of the LIBOR issue gathers momentum, it can be expected that similar such claims will be brought in the United Kingdom. One can envisage a whole raft of difficult issues in such litigation including whistleblowing and, quite conceivably, stigma claims for innocent LIBOR-setters tarred with the brush of the not-so-innocent. Those with long memories will recall that stigma damages arose in the first place from a previous banking scandal in BCCI.
The heart of an employee’s claim is likely to be at the heart of the whole scandal. As was asked by Senator Robert Dole in the Watergate hearings – “what did the president know, and when did he know it”.
Moreover, the interface between the private law rights of employees and the regulatory processes of the FSA will demand careful handling. Employees will be reluctant to allow themselves to be hung out to dry by their employer, and the not-so-innocent may consider that there is a lurking danger of criminal prosecution. Do they litigate within the short tribunal time limits or wait and see? If they choose to sue, have they thereby waived their right to plead privilege against self-incrimination within the regulatory investigation? Do they sue but seek a stay so as to preserve their right “to take the 5th”? Delicate issues and both legally & factually complex.
Employees will probably have a lot on their plate – employment proceedings, regulatory investigation, possible criminal prosecution and regulatory disciplinary processes.