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Barclays Bank fined $200 million by CFTC for attempted manipulation of Libor

Barclays offered settlement acknowledging order without admittting/denying findings

By Press Release

June 27, 2012 • Reprints

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) issued an Order today filing and settling charges against Barclays PLC, Barclays Bank PLC (Barclays Bank) and Barclays Capital Inc. (Barclays Capital) (collectively Barclays or the Bank).  The Order finds that Barclays attempted to manipulate and made false reports concerning two global benchmark interest rates, LIBOR and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period, commencing as early as 2005.

According to the Order, Barclays, through its traders and employees responsible for determining the Bank’s LIBOR and Euribor submissions (submitters), attempted to manipulate and made false reports concerning both benchmark interest rates to benefit the Bank’s derivatives trading positions by either increasing its profits or minimizing its losses.  This conduct occurred regularly and was pervasive.  In addition, the attempts to manipulate included Barclays’ traders asking other banks to assist in manipulating Euribor, as well as Barclays aiding attempts by other banks to manipulate U.S. Dollar LIBOR and Euribor.

The Order also finds that throughout the global financial crisis in late August 2007 through early 2009, as a result of instructions from Barclays’ senior management, the Bank routinely made artificially low LIBOR submissions to protect Barclays’ reputation from negative market and media perceptions concerning Barclays’ financial condition.

The CFTC Order requires Barclays to pay a $200 million civil monetary penalty, cease and desist from further violations as charged, and take specified steps, such as making the determinations of benchmark submissions transaction-focused (as set forth in the Order), to ensure the integrity and reliability of its LIBOR and Euribor submissions and improve related internal controls.

“The American public and our markets rely upon the integrity of benchmark interest rates like LIBOR and Euribor because they form the basis for hundreds of trillions of dollars of transactions and affect nearly every corner of the global economy,” said David Meister, the CFTC’s Director of Enforcement.  “Banks that contribute information to those benchmarks must do so honestly.  When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports that result from senior management orders to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined.  The CFTC launched this investigation to protect the markets and the public from such illegal conduct, and today’s action demonstrates that we will bring the full force of our authority to bear as we carry out that mission.”

LIBOR and Euribor

LIBOR – the London Interbank Offered Rate – is among the most important benchmark interest rates in the world’s economy, and is a key rate in the United States.  LIBOR is based on rate submissions from a relatively small and select panel of major banks, including Barclays, and is calculated and published daily for several different currencies by the British Banker’s Association (BBA).  Each panel bank’s submission is also made public, and the market can therefore see each bank’s independent assessment of its own borrowing costs.  LIBOR is supposed to reflect the cost of borrowing unsecured funds in the London interbank market.

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Related Terms
bank 6455European Union 2864U.S. Securities and Exchange Commission 958cftc 938Financial Services Authority 192Federal Bureau of Investigation 147Manipulation 133Libor 104U.S. Justice Department 78U.S. Department of Justice 68media attention 49London Interbank 47David Meister 43Barclays Bank PLC 21FSA 16European Banking Federation 8Barclays Bank 4media perceptions 4bank acts 4Washington Field Office 4aided and abetted traders 3Economic and Monetary Union 3panel bank 2Barclays Capital securities 1negative media speculation 1

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