Nine banks accused of rigging rate benchmark

Nine large banks, including six from Canada, have been accused in a lawsuit of conspiring to rig a Canadian rate benchmark to improve profits from derivatives trading.

The complaint, filed by a Colorado pension fund in U.S. District Court in Manhattan late on Friday, accused Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and the other banks of suppressing the Canadian Dealer Offered Rate (CDOR) from Aug. 9, 2007, to June 30, 2014.

According to the Fire & Police Pension Association of Colorado, the banks hoped to reduce interest they would owe investors on CDOR-based derivatives transactions in the United States, including swaps and Canadian dollar futures contracts, and generate potentially billions of dollars of improper profit. The fund is seeking unspecified damages for investors in the proposed class action for alleged violations of U.S. antitrust, commodity and anti-racketeering laws over the nearly seven-year period.

Other defendants include Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Bank of America Corp, Deutsche Bank AG and HSBC Holdings Plc. Eight of the banks declined to comment on Monday. The ninth, Bank of Montreal, did not respond to requests for comment.

CDOR is a rate at which banks will lend to corporate clients using bankers’ acceptances, a short-term credit instrument. It is now known as the Canadian Dollar Offered Rate, and calculated daily based on rate submissions from banks.