Washington, D.C. – Bank of America has been ordered to pay a $30 million penalty for attempting to manipulate the USD ISDAFIX benchmark, a key global interest rate, the Commodity Futures Trading Commission (CFTC) announced today.
The CFTC alleges that between January 2007 and December 2012, Bank of America traders engaged in manipulative conduct designed to benefit the bank’s derivatives positions. These positions included cash-settled options on interest rate swaps and interest rate swap futures. The bank reportedly made false reports and attempted to influence the benchmark to favor its trades at the expense of other market participants.
According to the CFTC, the manipulation attempts centered around the 11:00 a.m. Eastern Time fixing of the USD ISDAFIX rate. This rate is crucial for settling options on interest rate swaps and valuing other related financial products. Bank of America traders allegedly employed two primary methods to influence the benchmark.
The first involved strategically bidding, offering, or trading swap spreads and U.S. Treasuries around the 11:00 a.m. fixing time. The goal was to alter the rates and spreads captured by a leading interest rate swaps brokering firm, ultimately impacting the published USD ISDAFIX. The second method involved submitting false or misleading information regarding swap rates and spreads to the same brokering firm.
“This marks the ninth CFTC enforcement action involving manipulative conduct in connection with the USD ISDAFIX benchmark,” stated James McDonald, CFTC Director of Enforcement. “As this case shows, the Commission will continue to work vigilantly to ensure the integrity of critical financial benchmarks and hold all wrongdoers accountable, no matter how widespread the misconduct.”
The CFTC’s order details instances where Bank of America traders placed bids and offers, and executed trades, in the moments leading up to the 11:00 a.m. fixing, specifically intending to affect the rates reported to panel banks and, subsequently, the final USD ISDAFIX publication. The investigation revealed that traders understood the potential impact of these actions on the benchmark.
The $30 million civil monetary penalty levied against Bank of America underscores the CFTC’s commitment to policing benchmark manipulation and maintaining the integrity of financial markets.
Source: CFTC.gov
Related Federal Cases
- Vanetra Brown, Bank ID Theft, VA 2023 · Washington
- Ri Jong Chol, Bank Fraud, Washington D.C. · Washington
- Joshua Lee Hernandez, Capitol Assault, District of Columbia 2021 · Washington
- Bryan Rice, Fentanyl & Gun Crimes, District of Columbia 2024 · Washington
- D.C. Woman, Covid-19 Relief Heist, District of Columbia 2024 · Washington
