Libor Rate Fixing Scam
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Three of Britain's biggest lenders, RBS, Lloyds and HSBC are among the 17 banks and one broker that are being investigated, following Barclays' involvement in fixing two of the most important interest rates in the global financial markets which resulted in a record fine.

Other banks being investigated include Citigroup, UBS, ICAP and Deutsche Bank are also reported to be under investigation by regulators across the world.

This week, it was revealed that Barclays CEO Bob Diamond and three of the UK bank's most senior executives rejected their bonuses for 2012 after the regulators in the US and the UK fined the group a record £290m for manipulating the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) markets.

Barclays, and the other banks, still face fines from other jurisdictions, such as in Japan and Switzerland because those regulators have not finished their investigations. The FSA added that there is 'a number of other significant cross-border investigations.'

"We have a number of investigations that are ongoing," said Tracey McDermott, director of enforcement at the FSA. "Obviously we need to look at each case on its own particular facts but the initial indications are that Barclays was not the only firm that was involved in this."

Barclays Widespread Market Manipulation

Barclays reached settlements with the FSA, the US Commodity Futures Trading Commission (CFTC) and the United States Department of Justice Fraud Section (DOJ) and the other panel members to the bodies that set various interbank rates after the authorities completed an industry-wide investigation into the setting of interbank offered rates across a range of currencies between 2005 and 2009.

"Barclays' misconduct was serious, widespread and extended over a number of years," said McDermott. "The integrity of benchmark reference rates such as LIBOR and EURIBOR is of fundamental importance to both UK and international financial markets. Firms making submissions must not use those submissions as tools to promote their own interests."

"Making submissions to try to benefit trading positions is wholly unacceptable.  This was possible because Barclays failed to ensure it had proper controls in place.  Barclays' behaviour threatened the integrity of the rates with the risk of serious harm to other market participants," added McDermott.

Barclays  agreed to pay penalties totalling £59.5m to UK's Financial Services Authority and a further $360m to US authorities related to misconduct in the LIBOR and EURIBOR markets.

Fixing Rates

Libor and Euribor valuations directly influence the value of trillions of dollars of financial deals between banks and other institutions.

However, it also effects the general public on an immediate level because the wholesale rates influence how much homeowners pay on variable rate loans and mortgages.

The British Bankers' Association (BBA) announced that is now investigating how it can change the way the Libor rate is set, because currently at around noon every day, the rate is published by the BBA, based on rates submitted by dozens of banks.

At each bank, "submitters" file their daily Libor rates to the BBA, but as demonstrated by the Barclays investigation - these submitters were consistently filing false figures in order to deliver favourable numbers for traders and senior managers.

In emails released by the FSA, when one submitter sent an email notifying traders that they would be in late on a certain day, the trader responded by saying "Noonish? Who's going to put my low fixings in? hehehe."

The submitter replied, "... will be here if you have any requests for the fixings."

The figure banks should file should technically reflect what the bank thinks it can borrow that day. A lower number means a more favourable image of the bank because it means the firm is under less financial stress.

While Barclays has been officially implicated and fined in this situation, it is clear that Barclays will not be the only bank investigated as it takes more than one institution to create this situation, says the FSA.