How will Libor scandal affect wirehouse advisers?
The unfolding investigations into manipulation of the LIBOR interest rate could be the next ugly story that wirehouse advisers will have to explain to clients.
The unfolding investigations into manipulation of the Libor interest rate could be the next ugly story that wirehouse advisers will have to explain to clients.
“This is going to be massive,” said Andrew Stoltmann, a plaintiffs attorney in Chicago. “Financial advisers can get ready to have their firms’ names dragged through the mud. This is going to be in the news for years.”
The $453 million that Barclays PLC agreed to pay UK and US regulators on Wednesday for the role of Barclays traders and executives in the alleged conspiracy is likely the tip of a very large iceberg.
Among institutions that have received subpoenas from U.S. regulators in connection to the probe are UBS, Bank of America and Citigroup, according to published reports
“Any scandal with firms is bad for financial advisers,” said recruiter Danny Sarch. “Damage to their firms is damage to them by association and it drives them crazy.”
Mr. Sarch has not yet heard a lot of concern expressed by wirehouse advisers, but the fallout from the story could be huge. “It’s another potential headline risk,” he said.
Given that the Libor is the reference rate for trillions of dollars worth of mortgages, credit cards, derivatives and other financial instruments, the range of claimants for damages could be enormous.
“There’s going to be tsunami of litigation on this,” said Mr. Stoltmann. “Class action and defense lawyers are going to be busy with this for a long time.”
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