Royal Bank of Scotland Japan unit sentenced in Libor probe

RBS Securities Japan Ltd. in April pleaded guilty to wire fraud

Royal Bank of Scotland Group Plc was ordered to pay $50 million by a federal judge in Connecticut over claims that it rigged the London interbank offered rate.

RBS Securities Japan Ltd. in April pleaded guilty to wire fraud as part of a settlement of more than $600 million with U.S and U.K. regulators over Libor manipulation, according to court filings. U.S. District Judge Michael P. Shea in New Haven today sentenced the Tokyo-based unit of RBS, Britain’s biggest publicly owned lender, to pay the agreed-upon fine, according to a Justice Department statement.

Global investigations into banks’ attempts to manipulate the benchmarks for profit have led to fines and settlements for lenders including RBS, Barclays Plc, UBS AG and Rabobank Groep.

RBS was among six companies fined a record 1.7 billion euros ($2.3 billion) by the European Union last month for rigging interest rates linked to Libor. The combined fines for manipulating yen Libor and Euribor, the benchmark money-market rate for the euro, are the largest-ever EU cartel penalties.

Global fines for rate-rigging have reached $6 billion since June 2012 as authorities around the world probe whether traders worked together to fix Libor, meant to reflect the interest rate at which banks lend to each other, to benefit their own trading positions.

‘Important Reminder’

“Today’s sentencing of RBS is an important reminder of the significant consequences facing banks that deliberately manipulate financial benchmark rates,” Acting Assistant U.S. Attorney General Mythili Raman said in a statement.

Royal Bank of Scotland didn’t immediately respond to e- mails sent after regular business hours in London seeking comment on the sentencing.

RBS, based in Edinburgh, agreed in February to pay $325 million to the U.S. Commodity Futures Trading Commission, $150 million to the Justice Department and 87.5 million pounds ($137 million) to the U.K.’s Financial Services Authority for manipulating benchmark interest rates.

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.

Plea Agreement

As part of the plea agreement, RBS Securities Japan accepted responsibility for the misconduct of certain derivatives traders who tried to influence published yen Libor rates by seeking adjustments to the bank’s submissions from as early as 2006 through at least 2010, according to a joint sentencing memorandum filed in the case last month.

The misconduct involved about 20 RBS traders, about four of whom worked for RBS Securities Japan, according to the sentencing memo. The head of the unit, Ryusuke Otani, left the firm on the same day its plea agreement was filed.

The case is U.S. v. RBS Securities Japan Ltd., 3:13- cr-00073, U.S. District Court, District of Connecticut (New Haven).

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