A storm, or more aptly, a hurricane of litigation is on its way for the banks involved in the LIBOR rate-rigging scandal. The LIBOR banks face not just the prospect of criminal prosecution, but also exposure to law suits by thousands of market participants and others who relied upon the key interest rate in transactions and financial products.   Getting out ahead of the other banks, the UK's Barklays has been busy making deals to contain its exposure to prosecution and protect its executives.  Upon admitting its role in the scandal and implicating the other rate setting banks as well as central banks, Barclays promptly entered a civil settlement with the Commodities and Futures Trading Commission, agreeing to pay $200 million, and negotiated a deal with the UK's Financial Services Authority and the US Justice Department whereby Barclays and its executives escape prosecution. The remaining rate setting banks, however, remain under threat of prosecution for antitrust and fraud violations, potentially including prosecution under statutes created to fight organized crime. The prospect of criminal prosecution and the threat of anti-trust treble damages are only the beginning.  All of the rate setting banks, including Barclays, face the prospect of wave after wave of lawsuits from market participants affected by or reliant upon LIBOR.   These include major banks like Goldman Sachs whose interest rate swap products relied on LIBOR, as well as approximately 75% of America's major cities across the country who purchased those interest rate swaps.  In addition, large public pension funds as well as hospitals, universities, and other nonprofits who held interest rate swaps or other derivatives pegged to LIBOR are considering suing the banks.

In an August 22, 2012 statement SEC Chair Mary Schapiro announced that the much anticipated money market reforms she has championed have hit a wall.  It had been expected that the Commission would consider next week options for further reform like a free floating NAV, rather than a firm $1 NAV, perhaps a capital buffer, and a redemption restrictions.  Schapiro announced that "because three Commissioners have now stated that they will not support the proposal and that it therefore cannot be published for public comment, there is no longer a need to formally call the matter to a vote at a public Commission meeting."

As part of its ongoing protocol project, the International Swaps and Derivatives Association (ISDA) has announced the launch of the August 2012 Dodd-Frank Protocol. The Dodd-Frank Protocol is designed to allow swap market participants to simultaneously amend multiple ISDA Master Agreements for the purpose of facilitating compliance with Dodd-Frank regulatory requirements, such as External Business Conduct Rules and others as they are finalized. It consists of a series of amendments to existing documentation, as well as standardized questionnaires that must be completed by counterparties to satisfy new regulations.  ISDA has also announced that they plan to launch future protocols to simplify documentation changes for upcoming CFTC and SEC final rules, as well as changes under EMIR, MiFiD and MiFIR.