By Jonathan Stempel
NEW YORK, Aug 4 (Reuters) - The U.S. judge overseeingprivate litigation accusing global banks of manipulating Liboron Tuesday said she found a "viable legal theory" that couldjustify relief for investors who claim they were harmed by aconspiracy to rig the benchmark rate.
In a 431-page decision covering part of the litigation, U.S.District Judge Naomi Reice Buchwald in Manhattan said the theoryturns on what banks may have disclosed to a London administratorwho oversees the so-called London Interbank Offered Rate.
Libor underpins hundreds of trillions of dollars oftransactions, and is used to set rates on credit cards, studentloans and mortgages. It is calculated based on submissions bybanks that sit on panels.
Investors and regulators have accused big banks ofsuppressing Libor during the financial crisis to boost earningsor make their finances appear healthier.
"According to plaintiffs' allegations, each panel bank liedto the Libor administrator about its own borrowing costs,knowing that entities such as plaintiffs would rely on theaccuracy of that information; as was to be expected, plaintiffsthen relied to their disadvantage, perhaps reasonably, on thisfalse information," Buchwald wrote. "If these allegations provetrue, then defendants' conduct was fraud."
Buchwald also said various banks may be able to recover fromeach other should they be held liable. She has yet to decidewhether punitive damages should be available.
Tuesday's decision covers complaints filed under 28 separatecourt dockets by individual plaintiffs who are not pursuing anddo not want to join class-action lawsuits.
Buchwald said all of the complaints may go forward, but shedismissed some claims, and dismissed some bank defendants fromsix of the lawsuits.
The litigation began in 2011, and accused 16 banks includingBank of America Corp, Citigroup Inc, Credit SuisseGroup AG, Deutsche Bank AG, HSBC HoldingsPlc, JPMorgan Chase & Co, Societe Generale and UBS AG of conspiring to manipulate Libor.
In March 2013, Buchwald dismissed what she called a"substantial portion" of the litigation, including federalantitrust claims that could justify triple damages.
Authorities worldwide have levied about $9 billion of finesagainst banks and brokerages to settle Libor rigging probes.
On Monday, former Citigroup and UBS trader Tom Hayes wasconvicted by a London jury of conspiring to manipulate Libor,and sentenced to 14 years in prison.
The case is In re: Libor-based Financial InstrumentsAntitrust Litigation, U.S. District Court, Southern District ofNew York, No. 11-md-02262. (Editing by Grant McCool)