RBS fined $612 million by regulators for manipulating Libor

Derivatives Traders

More than a dozen RBS traders made hundreds of attempts to manipulate yen and Swiss franc Libor between mid-2006 and 2010 to benefit their trading positions, sometimes colluding with counterparts at other firms, the CFTC said. That continued even after the CFTC commenced its investigation into the wrongdoing.

RBS made at least 219 documented requests for inaccurate submissions, according to Britain’s FSA. The firm’s derivatives traders next to Libor-submitters “and encouraged the two groups to communicate without restriction despite the obvious risk that the derivatives traders would seek to influence” submissions.

The bank didn’t have any controls governing its Libor submissions until March 2011 and didn’t address the risk that derivatives traders could seek to influence the submissions until June 2011, the FSA said.

RBS said it has dismissed six individuals for Libor-related misconduct, including two managers. A further six have been “severely disciplined or are going through a disciplinary process,” the bank said. A further eight left the organisation before disciplinary action could be taken.

Criminal Charge

The settlement talks, which were close to completion last month, were prolonged as the Justice Department pressed RBS to plead guilty to criminal charges, two people with knowledge of the discussions said on Jan. 29. Zurich-based UBS’s Japanese unit pleaded guilty to one count of wire fraud in the U.S. in its December settlement. Barclays accepted no criminal liability.

Libor is calculated by a poll carried out daily on behalf of the British Bankers’ Association that asks firms to estimate how much it would cost to borrow from each other for different periods and in different currencies. The top and bottom quartiles of quotes are excluded, and those left are averaged and published for individual currencies before noon in London.

Bloomberg News

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