Washington, D.C. – July 28, 2014 – Lloyds Banking Group and Lloyds Bank have been slapped with a $105 million penalty by the U.S. Commodity Futures Trading Commission (CFTC) for false reporting and attempting to manipulate the London Interbank Offered Rate (LIBOR). The charges stem from actions taken by employees of Lloyds TSB and HBOS, which was acquired by Lloyds Banking Group in 2009.
The CFTC order details instances where Lloyds TSB successfully manipulated Sterling and Yen LIBOR rates. Additionally, the bank was found to have aided and abetted Rabobank’s attempts to manipulate Yen LIBOR. The manipulation aimed to benefit the firms’ cash and derivatives trading positions, undermining the integrity of LIBOR, a key global interest rate benchmark.
“By today’s action, Lloyds is being held accountable for serious misconduct,” stated Aitan Goelman, CFTC Director of Enforcement. “The CFTC remains committed to taking all actions necessary to ensure the integrity of the markets we oversee.”
According to the CFTC, HBOS also altered its Sterling and U.S. Dollar LIBOR submissions in an attempt to protect its reputation during the acquisition by Lloyds Banking Group. The settlement requires Lloyds Banking Group and Lloyds Bank to cease and desist from further violations of the Commodity Exchange Act and implement measures to ensure the integrity of future LIBOR submissions.
This action is part of a broader, multi-agency effort to address LIBOR manipulation. The U.S. Department of Justice (DOJ) entered into a deferred prosecution agreement with Lloyds Banking Group, deferring criminal wire fraud charges in exchange for continued cooperation and an $86 million penalty. The United Kingdom’s Financial Conduct Authority (FCA) also issued a Final Notice and collectively imposed a £105 million (approximately $179 million) penalty on Lloyds Bank and Bank of Scotland, a subsidiary of HBOS.
The CFTC acknowledged the cooperation of Lloyds Banking Group and Lloyds Bank throughout the investigation, as well as assistance from the DOJ, the FBI’s Washington Field Office, and the FCA. This order brings the CFTC’s total penalties imposed for LIBOR-related manipulative conduct to over $1.87 billion.
Source: CFTC.gov
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