According to the Financial Times, Lloyds Banking Group (LYG) is expected to soon announce that it has agreed to pay up to $509M to settle London Interbank Offered Rate rigging allegations. The settlement would include moneys to be paid to UK’s Financial Conduct Authority and The U.S.’s Commodity Futures Trading Commission and Department of Justice.
The British bank is just one of a number of financial institutions accused of manipulating major interest rate benchmarks. Lloyds belonged to the panel that turned in rates to yen-Libor and was a member of dollar-Libor, euro-denominated Libor, and sterling Libor panels.
Several authorities around the world have been probing numerous entities over allegations that traders colluded to gather to benefit their own trading books while their employers benefited from giving off an inflated impression of their actual financial health. Other banks that have settled include UBS (UBS), Barclays (BARC), Royal Bank of Scotland (RBS), ICAP, RP Martin, and Rabobank.
Some 17 ex-traders and brokers have been subjected to criminal charges over their involvement in Libor rigging. Deutsche Bank (DB), HSBC, Citigroup (C), and JPMorgan (JPM) are still under investigation for possible Libor manipulation.
Also, there is another possible rate manipulation scandal brewing. This is one that could prove even more costly to the banking industry than Libor.
Authorities in the U.K. and the U.S. are looking at possible manipulation by banks of the global currency markets. Some 15 authorities around the world are trying to determine whether price manipulation and collusion ensued. The foreign exchange market is a $5 trillion/day industry.
According to allegations, traders from rival banks got together in Internet chat rooms to fix benchmark prices used to reference rates for global investment and trade. Focus is being placed on the benchmark price that is set at 4pm, which is called the “fixing.” This is the price a lot of clients ask for when they perform foreign exchange trades primarily because it is thought to be transparent.
RBS CEO Says Currency-Rigging Scandal Could Top Libor, Bloomberg, July 18, 2014
Lloyds to Pay Up to $300M Libor Fine, Financial Times, July 24, 2014
Foreign exchange trading faces SFO criminal investigation, The Guardian, July 21, 2014
More Blog Posts:
US Supreme Court Will Hear Appeal Over Libor Antitrust Claims, Institutional Investor Securities Blog, July 2, 2014
Barclays Settles Two Libor-Related Securities Cases, Institutional Investor Securities Blog, April 16, 2014
Lloyds, Barclays, to Set Aside Hundreds of Millions of Dollars for Allegedly Mis-Selling to Victims, Stockbroker Fraud Blog, August 27, 2013