Thursday, 28 June 2012

CFTC orders Barclays to pay $200 million civil monetary penalty.

CFTC finds that Barclays attempted to manipulate interest rates and made related false reports to benefit its derivatives trading positions

The Order also finds that Barclays made false LIBOR reports at the direction of members of senior management to protect its reputation during the global financial crisis

As the Order shows, Barclays, in pursuit of its own self-interest, disregarded the fundamental principle that LIBOR and Euribor are supposed to reflect the costs of borrowing funds in certain markets. Barclays’ traders located at least in New York, London and Tokyo asked Barclays’ submitters to submit particular rates to benefit their derivatives trading positions, such as swaps or futures positions, which were priced on LIBOR and Euribor. Barclays’ traders made these unlawful requests routinely, and sometimes daily, from at least mid-2005 through at least the fall of 2007, and sporadically thereafter into 2009. The Order relates that, for example, one trader stated in an email to a submitter: 
“We have another big fixing tom[orrow] and with the market move I was hoping we could set [certain] Libors as high as possible.”
The traders’ requests were frequently accepted by Barclays’ submitters, who emailed responses such as;
 “always happy to help,” “for you, anything,” or “Done…for you big boy,” 
resulting in false submissions by Barclays to the BBA and EBF. The traders and submitters also engaged in similar conduct on fewer occasions with respect to Yen and Sterling LIBOR.

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