Washington, D.C. – Barclays PLC, Barclays Bank PLC and Barclays Capital Inc. have been charged by the U.S. Commodity Futures Trading Commission (CFTC) with attempting to manipulate and falsely reporting benchmark interest rates, LIBOR and Euribor, over a four-year period starting in 2005. The charges, detailed in an order filed today, allege a systematic effort to benefit the bank’s derivatives trading positions through both increasing profits and minimizing losses.
According to the CFTC, traders and employees responsible for LIBOR and Euribor submissions at Barclays engaged in regular and widespread attempts to manipulate the rates. These attempts included soliciting assistance from other banks to manipulate Euribor, as well as aiding other banks in manipulating U.S. Dollar LIBOR and Euribor. The misconduct wasn’t isolated; it occurred “on numerous occasions and sometimes on a daily basis.”
The order further alleges that during the 2007-2009 financial crisis, Barclays, under the direction of senior management, routinely submitted artificially low LIBOR rates to protect the bank’s reputation from negative market perception regarding its financial health. This practice demonstrates a deliberate attempt to conceal the bank’s true financial condition from the public and regulators.
As a result of the investigation, Barclays has agreed to pay a $200 million civil monetary penalty. In addition to the financial penalty, the CFTC order mandates that Barclays cease and desist from further violations and implement specific measures to improve the integrity and reliability of its benchmark submissions. These measures include making submission determinations transaction-focused and enhancing 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,” stated David Meister, the CFTC’s Director of Enforcement. “Banks that contribute information to those benchmarks must do so honestly.”
LIBOR, the London Interbank Offered Rate, and Euribor are crucial benchmark interest rates globally. LIBOR, calculated and published daily by the British Bankers’ Association, is based on submissions from a panel of major banks, including Barclays, and reflects the cost of borrowing unsecured funds in the London interbank market. Euribor is calculated similarly by the European Banking Federation.
Source: CFTC.gov
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