Barclays agreed Monday to pay $100 million to settle allegations that it illegally manipulated interest rates, costing investors millions. The manipulations also benefited Barclays’s own traders at times, the attorney general said.
Advertisement
Barclays is the first of several USA dollar-Libor-setting panel banks under investigation by the state attorneys general to resolve the claims against it, and Barclays has cooperated fully from the outset.
He said that as a result of the rate-rigging, government entities and non-profits were “defrauded of millions” when they entered into swap contracts with Barclays.
The settlement with 44 states marks the latest in a series of enforcement actions the bank has faced in connection with Libor manipulation. Global fines linked to Libor have topped $9 billion.
In one exchange in December 2007, a Barclays employee involved in submitting rates told his supervisor: “At the same time that we were setting at 5.30% I was paying 5.40%.in the market”.
Participating in the Barclays settlement are the attorneys general of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Other banks that have reached settlements with US authorities in connection with Libor rate-rigging scandals include UBS, Royal Bank of Scotland, Deutsche Bank and ICAP.
Three years after that deal was reached, Barclays agreed to pay an additional $60 million criminal penalty for violating the non-prosecution agreement it signed.
Barclays in 2012 pleaded guilty to rate manipulation and agreed to pay $453 million to British and USA authorities.
Meanwhile, from about 2007 and 2009, managers are said to have instructed submitters to send in rates lower than they otherwise would, so Barclays could avoid appearing like it was financial hot water and therefore needed to shell out more than its competitors to borrow funds.
Advertisement
Submission by a panel of 16 banks were supposed to reflect borrowing rates in the interbank market, and a daily Libor rate was calculated by averaging the middle eight submissions, according to Schneiderman’s statement.
