Major European Investment Bank Settles Charges of Manipulation, Attempted Manipulation and False Reporting of Reference Rates

On June 4, 2018, the Commodity Futures Trading Commission filed and settled charges against a major European investment bank, and the U.S. Department of Justice entered into a deferred prosecution agreement with the bank relating to charges of manipulation and attempted manipulation of LIBOR and Euribor at various points from 2006 to 2012.

The CFTC and DOJ alleged that from around 2010 to 2012, the investment bank made deliberately false reports of USD and Euro LIBOR and Euribor to artificially lower the bank's submissions to create the appearance that the bank was able to borrow money at more favorable rates and was therefore more creditworthy than it was.

It was also alleged that the investment bank's traders on the bank's Paris Treasury Desk and others attempted to manipulate and actually manipulated LIBOR and Euribor at certain points from 2006 to 2010 by tailoring submissions in order to maximize profits and mitigate losses. The investment bank was also alleged to have aided and abetted traders from another bank to manipulate the rates in order to benefit the positions of both banks. According to the CFTC's enforcement order, this type of behavior was facilitated by the bank's failure to institute proper internal controls, procedures and policies to monitor its LIBOR and Euribor submission processes.

The investment bank has agreed to pay a fine of $475 million to the CFTC and $275 million to the DOJ, cease and desist from further violations and take steps to ensure the integrity of its benchmark interest rate submissions in the future.

View the CFTC's press release.

View the CFTC's enforcement order.

View the DOJ's press release.

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