Washington, D.C. – October 29, 2013 – The U.S. Commodity Futures Trading Commission (CFTC) today announced a settlement with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), charging the financial institution with false reporting and manipulation of key benchmark interest rates. The charges relate to the London Interbank Offered Rate (LIBOR) for U.S. Dollar, Yen, and Sterling, as well as the Euro Interbank Offered Rate (Euribor).
The CFTC found that Rabobank, through the actions of over two dozen employees across six offices globally, engaged in manipulative conduct spanning nearly six years, from mid-2005 through early 2011. These actions included attempts to manipulate LIBOR and Euribor, and successful manipulation of Yen LIBOR. Furthermore, the bank was found to have aided and abetted the manipulative efforts of traders at other financial institutions.
As part of the settlement, Rabobank is obligated to pay a penalty of $475 million. The CFTC order also requires Rabobank to implement further measures to ensure the integrity of its LIBOR and other benchmark interest rate submissions moving forward.
“The CFTC has now charged five global financial institutions for LIBOR manipulative schemes, with nearly $1.8 billion in penalties imposed by the Commission alone,” stated David Meister, Director of Enforcement. “The sheer number of institutions and individuals involved in these cases reflects a truly shocking and brazen degree of unlawfulness.”
According to the CFTC, Rabobank failed to adequately address conflicts of interest by assigning traders with positions tied to LIBOR and Euribor to also serve as the bank’s rate submitters. These submitters were often pressured to prioritize maximizing trading profits over making honest assessments of borrowing costs. The CFTC alleges that traders and submitters were even positioned in close proximity, facilitating direct requests for unlawful submissions.
“For years, Rabobank allowed profit-driven traders located in offices around the globe to corrupt the submission process for critical benchmark interest rates,” said Gretchen Lowe, Acting Director of Enforcement-designate. “When an institution threatens the integrity of the financial markets, we bring the full force of our authority to bear.”
Rabobank submitted daily borrowing rate information used in calculating LIBOR and Euribor, and also traded derivatives whose value depended on these benchmarks. The CFTC order details hundreds of manipulative acts aimed at undermining the integrity of these rates.
Source: CFTC.gov
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