Feeding Frenzy Seen If Wall Street Sues Itself Over Libor!

• Feeding Frenzy Seen If Wall Street Sues Itself Over Libor! 
  By Donal Griffin, http://www.businessweek.com/ 
  Wall Street, grappling with mounting regulatory probes and investor claims over alleged interest-rate manipulation, may face yet another formidable foe: Itself.
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  Goldman Sachs Group Inc. (GS) (GS) and Morgan Stanley (MS) (MS) are among financial firms that may bring lawsuits against their biggest rivals as regulators on three continents examine whether other banks manipulated the London interbank offered rate, known as Libor, said Bradley Hintz, an analyst with Sanford C. Bernstein& Co. Even if Goldman Sachs and Morgan Stanley forgo claims on their own behalf, they oversee money-market funds that may be required to pursue restitution for injured clients, he said.
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  Because Libor is based on submissions from only some of the world’s largest banks, the probes threaten to pit firms uninvolved in setting the rate against any implicated in its manipulation, Hintz said. Libor serves as a benchmark for at least $360 trillion in securities.
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  “This will be a feeding frenzy of sharks,” said Hintz, who has served as treasurer of Morgan Stanley and chief financial officer of Lehman Brothers Holdings Inc. “We’re going to have Wall Street suing Wall Street.”
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  Libor and similar rates are derived by surveying a group of banks daily. Participating firms are asked how much it would cost them to borrow from one another for 15 different periods in currencies including dollars, euros, yen and Swiss francs. After a set number of quotes are excluded, those remaining are averaged and published.
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  Credit Crisis
  Regulators are looking at whether banks made submissions that understated funding costs during the credit crisis or if traders at the firms influenced Libor to boost profits.
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  A probe by U.K. and U.S. authorities already has cost Barclays Plc (BARC) a record 290 million-pound ($456 million) fine and led to the ouster of Chief Executive Officer Robert Diamond, 60. Traders at Deutsche Bank AG (DBK), HSBC Holdings Plc (HSBA) and Credit Agricole SA (ACA) are being examined for possible links to a former Barclays employee, a person with knowledge of the matter said. UBS AG (UBSN), Citigroup Inc. (C) (C), JPMorgan Chase & Co. (JPM) (JPM) and Credit Suisse Group AG (CS) (CS) are among at least a dozen banks to disclose inquiries.
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