FSA, CFTC Fine Barclays Almost $300M for LIBOR, EURIBOR Manipulation
UK regulator the Financial Services Authority and the US Commodity Futures Trading Commission have fined Barclays Bank £59.5 million ($92.6 million) and $200 million, respectively, for attempting to manipulate LIBOR and EURIBOR rates -- which are used to price over-the-counter interest-rate derivatives contracts, as well as other assets such as mortgages and loans -- to its own advantage.
According to the FSA, over a period of several years, Barclays' interest-rate derivatives traders influenced those at the bank responsible for submitting its rates to the British Bankers Association and the European Banking Federation -- which publish LIBOR and EURIBOR, respectively, based on an average of contributed rates from banks -- to submit rates that would benefit the bank's trading positions by increasing profits or minimizing risk.
According to the CFTC, Barclays' senior management sought to protect the bank's reputation during the financial crisis by instructing staff to make artificially low submissions, which "occurred regularly and was pervasive," and Barclays also asked other banks to assist it in manipulating the benchmarks -- and aided other banks' attempts.
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