Prosecutors in the UK have recently filed criminal charges against three former Barclays PLC traders, charging them with conspiracy to defraud for their respective roles in the rigging of the London Interbank Offered Rate (LIBOR). The new charges were brought by the UK’s office of Serious Fraud which opened its investigation in July of 2012.
Thirteen people have been criminally charged in the UK and US in connection to the rigging of LIBOR. This rate is used as a benchmark to set interest rates on trillions of dollars of loans and other financial contracts. Several other trading rings are also under investigation. Authorities in the US, UK and the European Union have been investigating former traders from various firms who may have worked together to manipulate the Euro Interbank Offered Rate (Euribor).
The authorities allege that these bank traders attempted to push Libor and other benchmarks up or down which could increase the value of their trading portfolio. This would affect contracts which could have been based upon the benchmarks’ levels.
There has been added tension between the UK office and the US Department of Justice. In the past couple of years there have been competing interests as to which entity files charges and enters plea agreements. The new activity by the UK Fraud Office appears to signal that they will be fairly aggressive with prosecuting these LIBOR rigging cases.
Both ICAP, a middleman for large institutions looking to buy and sell financial products, and Barclays, have resolved cases with admissions of wrongdoing and hefty penalties. Last September ICAP settled the US and UK Libor investigations for $87 million. Barclays paid $450 million in June of 2012.