Libor banking scandal continues

This video is called Record fine for UBS.

By Andre Damon in the USA:

UBS Libor-rigging settlement exposes pervasive bank fraud

20 December 2012

UBS, the largest bank in Switzerland, announced Wednesday it had agreed to a $1.5 billion settlement with regulators in three countries, admitting that between 2005 and 2010 it intentionally manipulated the London Interbank Offered Rate (Libor), the most important global interest rate.

A report issued by the British Financial Services Authority (FSA) on the settlement provides voluminous documentation, in the form of emails and instant message exchanges, of the falsification on virtually a daily basis of UBS’ submissions to the British Bankers’ Association (BBA), which oversees Libor.

The settlement comes six months after a $450 million deal between regulators and Barclays, the fourth-largest global bank, to settle charges that it similarly manipulated Libor.

UBS and Barclays are among some 20 major financial institutions under investigation for colluding to manipulate the benchmark rate, including HSBC, Royal Bank of Scotland, Deutsche Bank, Credit Suisse, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui, JPMorgan Chase, Citigroup and Bank of America.

The Libor scandal has laid bare the rampant criminality in the operations of the world’s major banks and exposed the fact that the so-called “free market” is rigged by the most powerful banks and corporations for their own profit.

The Libor rate, which is set daily in London under the auspices of the BBA, a private banking lobby, is supposed to reflect the average cost of loans between major banks. An estimated $800 trillion in financial products are linked to Libor. These include $10 trillion in mortgages, student loans and credit cards. About 90 percent of US commercial and mortgage loans are linked to the index.

Between 2005 and 2007, Barclays, UBS and other banks systematically inflated their borrowing cost estimates to the Libor board in order to drive up the Libor rate and increase their profits on derivatives linked to it. After 2007, when the global financial crisis intensified, the banks lowballed their submissions to Libor in order to mask their financial weaknesses and lower their borrowing costs.

By manipulating the rate upward, the banks robbed countless millions of people of billions of dollars in inflated loan costs. By manipulating the rate downward, they deprived states, cities, pension funds and retirees with fixed investments of untold billions in revenues from bond holdings.

The settlements with both Barclays and UBS—expected to be followed by similar deals with other banks under investigation—enable the banks to pay a small fraction of their revenues and avoid any criminal charges. Not a single leading executive at either bank has been named or indicted for his or her role in defrauding the world.

In the case of UBS, the US Justice Department made a point of not criminally charging UBS itself, instead obtaining a guilty plea only from its Japanese subsidiary. Only two mid-level UBS employees have been criminally charged.

On June 30, the co-chairman of Deutsche Bank, Anshu Jain, suddenly resigned, supposedly voluntarily. It has since become clear that Jain was forced out due to his involvement in the criminal manipulation of the Libor lending rate, which was uncovered in the summer of 2012: here.

USA: Libor manipulation cost Fannie Mae and Freddie Mac more than $3 billion, according to an estimate by a government watchdog, who recommends the government-owned mortgage giants sue the big banks: here.

A US judge has dismissed most of the claims against a group of banks including Bank of America, Royal Bank of Scotland, JP Morgan Chase and Barclays in civil lawsuits over the rigged Libor interest rate.

Ex-Goldman Sachs trader faces fraud charge after surrender to FBI: here.

Anti-fraud agency hints at inquiry into Libor scandal: here.

CITY trader Tom Hayes has been found guilty of rigging global Libor interest rates. He has been sentenced to 14 years in prison. His defence was that everybody was doing it: here.

Bank of England implicated in illegal Libor rigging: here. And here. And here.

19 thoughts on “Libor banking scandal continues

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  5. Rabobank Libor boss gets golden handshake of nearly €900,000

    Friday 10 January 2014

    The Rabobank executive in charge of the department where bankers were embroiled in an interest rate fixing scandal left the company with almost €900,000, broadcaster RTLZ said on Friday.

    Sipko Schat stepped down after local branch managers withdrew their support for him. There was widespread criticism of the fact that Schat remained in his post, after the US, British and Dutch regulators fined Rabobank €774m for its role in the Libor scandal.

    Schat has now been given a golden handshake of €884,000 – equivalent to one year’s salary, RTLZ. This is in line with the banking code of conduct. The amount was worked out in consultation with an independent expert.



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  10. A SENIOR banker was sentenced to 14 years’ imprisonment for his involvement in the rate-rigging scandal yesterday.

    Banks have paid out billions in fines for rate-rigging but millionaire Tom Hayes is the first individual to be found guilty at trial for rigging the interbank lending rate known as the Libor rate.

    The Libor rate is the international benchmark that indicates the interest rate that banks charge when lending to one another.

    Rigging this rate allows offenders to make more money or paint a false picture of the bank’s financial situation in order for it to trade.

    During his trial Mr Hayes said that Libor rigging was an “industry-wide practice.” Mr Hayes said that in some instances you could get the rate changed simply by offering someone a Mars bar.

    The jury found Mr Hayes guilty on all eight charges of conspiracy to defraud.

    Professor Andre Spicer of Cass Business School warned the public not to see this as a one-off sentencing of one bad banker and that the case revealed much about “the culture of the City, which created a hot-house for unethical behaviour.”

    Commenting on the trial Mr Spicer said that it demonstrated that traders were recruited for the results they could produce and were “bereft of the ability to make ethical judgments.”

    Prof Spicer said the trial highlighted “the flawed design of the market in encouraging manipulation” and a “widespread denial of collective misbehaviour within the industry.”

    Mr Hayes’s methods were reported in 2009 and he was sacked by Citigroup although he was allowed to keep his £2.2 million bonus.


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  16. Thursday 22nd December 2016

    posted by Morning Star in World

    SWISS authorities have fined a bunch of banks — including two British and one French — for rigging interest rates.

    Regulator Comco said yesterday that the banks — Britain’s Barclays and RBS, and France’s Societe General — acted as a cartel to distort the price of financial products connected to common interest rate benchmarks.

    Deutsche Bank was also involved in the rigging but escaped fines because it co-operated with Comco.

    Barclays was fined nearly £36 million, RBS £10m and Societe General £2.5m.

    The financial instruments the bankers targeted were based on euro interest rates and the bankers colluded to determine their submissions on which the Euribor rate is based.

    Other settlements were reached with varying groups of banks over cartels related to derivatives and benchmarks in Swiss francs and yen.

    The scam appears to be very similar to the Libor rigging scandal in London, where bankers colluded to manipulate the Libor rate which is meant to represent the rate banks charge each other for overnight lending.

    As so many financial products were linked to Libor, this had worldwide effects.


  17. Thursday 22nd December 2016

    posted by Morning Star in World

    A SINGAPORE court found a former private banker guilty yesterday of trying to obstruct investigations linked to the corruption-tarred Malaysian development bank 1MDB.

    The State Court convicted Yeo Jiawei, a former “wealth planner” at Swiss private bank BSI, on four charges related to obstructing, preventing or perverting the course of justice. Mr Yeo faces up to three and a half years in prison.

    He was alleged to have asked three key witnesses to lie to the authorities, get rid of a laptop and avoid travelling to Singapore.

    Prosecutors say he pocketed £15 million for his efforts to cover up the scandal.

    Investigators in Singapore, Switzerland, Hong Kong and the US have been probing allegations that people close to Malaysian Prime Minister Najib Razak stole over £800m from 1MDB.

    In February, Singapore authorities said they had seized a large number of bank accounts in connection to the probe.

    Singapore told BSI to stop operating in the city in May for breaking anti-money laundering laws, among other problems.


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