In Latest Market Rigging Settlement, Citi Fined $425MM For Manipulating Interest Rates

Tyler Durden's picture

Another day, another too-big-to-fail bank gets slapped on the wrist after being busted for blatant rigging of the market. The CFTC Order finds that, beginning in January 2007 and continuing through January 2012 (the Relevant Period), Citibank on multiple occasions attempted to manipulate, and made false reports concerning, the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products. Notably, while a handful of European banks have already settled criminal or civil claims tied to Libor rigging, Citi is the first U.S. bank to do so.

The CFTC Order requires Citibank to pay a $250 million civil monetary penalty and to immediately cease and desist from further violations of the Commodity Exchange Act.  Further, Citibank is required take specified steps to implement and strengthen its internal controls and procedures, including measures to detect and deter trading potentially intended to manipulate swap rates such as USD ISDAFIX and to ensure the integrity of interest-rate swap benchmarks.


“The CFTC’s order demonstrates that we will vigorously continue to investigate any efforts to manipulate financial benchmarks, and we will take action where possible to protect the integrity of these benchmarks,” said Aitan Goelman, the CFTC’s Director of Enforcement. Mr. Goelman further commented, “The terms of this settlement are intended to reflect all aspects of Citibank’s response to the investigation, including the evolving nature of its cooperation.”


Citibank’s Unlawful Conduct to Benefit Derivatives Positions


As the Order sets forth, Citibank attempted to manipulate USD ISDAFIX by making false USD ISDAFIX submissions.  According to the Order, on multiple occasions during the Relevant Period, Citibank, in its role as a panel bank, submitted a rate or spread higher or lower than the reference rates and spreads disseminated to the panel banks on certain days that Citibank had a derivatives position settling or resetting against the USD ISDAFIX benchmark, in an attempt to benefit that derivatives position.


The Order also finds that Citibank, on multiple occasions, attempted to manipulate USD ISDAFIX by bidding, offering, and executing transactions in targeted interest rate products, including swap spreads and U.S. Treasuries at or near the critical 11:00 a.m. fixing with the intent to affect the reference rates and spreads captured in the snapshot sent to submitting banks, and thereby to affect the published USD ISDAFIX.  As captured in electronic communications, Citibank traders boasted about “pushing out the isdafixing” or “push[ing]” the market, described USD ISDAFIX as being “suprising[ly] easy to push,” and explained the best way to “influence the set.”


The Order describes multiple examples involving these strategies for attempted manipulation and false reporting by Citibank during the Relevant Period.

Additionally, Citi faces fine for manipulating Yen Libor...


Citi issued the following statement:

These settlements represent a significant step for Citi in resolving its legacy benchmark rate investigations. In addition to adopting industry-wide reforms related to participation in benchmark rates, Citi has made substantial investments in its systems, controls and monitoring processes to better guard against inappropriate behavior.  


Our greatest priority is to ensure that we conduct business in keeping with the highest ethical standards. We continue to fully cooperate with pending investigations conducted by other agencies related to benchmark rate submissions.”

As they proudly note in the press release, with today's actions, CFTC has imposed over $5.08 billion in penalties in 17 actions against banks and brokers to address rigging and manipulation in ISDAFIX, FX, and LIBOR benchmarks.

"Cost of doing business" is what we call that... you decide - basedon the spike in Citi's stock - whether the market thinks this is a let-off or a real punishment...

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TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) May 25, 2016 10:22 AM

Imagine the fines if someone actually audited the Fed

BaBaBouy's picture

CFTC ??? Paper GOLD ? Paper SILVER ? Manipulation ??? Huh Huh Huh ???

What UP, What UP ???

nope-1004's picture

Big banks own CFTC.  CFTC fines them, release statement about "penalty" and "enforcement", nothing changes, corrupt fucking system, go to hell CFTC as I know this statement is a totally fraudulent bullshit story about penalizing your parent.

And fuck you Gensler & Massad.  You've sucked off the system for long enough.  Go get real jobs and produce something for humanity, instead of riding the money train at our expense.

The banking sector is a total fraud.  Needs to burn to the ground.


Cognitive Dissonance's picture

Another day, another dollar of (illegal) profits and a penny of fines. Life's good when you're a crony of the king.

Chupacabra-322's picture

It will continue. And, we'll sit back & continue to take it.

metastar's picture

When will Yellen the Felon be held accountable?

thetruthhurts's picture
.....For Manipulating Interest Rates

Only the Private Federal Reserve cartel can do that........

Kina's picture

Do they ever pay these fines? Or is it just a headline and they all forget about it, or do they just share the fine money around with the guys.

KnuckleDragger-X's picture

Of course they pay them...out of petty cash, and then write it off their taxes....

ShorTed's picture

Of course they're just sharing the fine money...the guys at the CFTC used to work at Citi, or vice-versa, that's why manipulating a multi trillion (Notional, for now) market results in a paltry 250MM fine (taht comes out of shareholder value, not the actual offenders pocket).

KnuckleDragger-X's picture

When they start perp walking the entire C-suite out the front door, I'll believe it. Until then, the circus is in town.......

nibiru's picture

In the early 20s' in the part of Europe, there was a capital punishment for a clerk to accept a bribe - I believe it should be reinstated also here. 

WTFUD's picture

First you've got to admit you're an alcoholic . . . . . and then there's a lengthy Detox period. Not pay your fines and carry on the very next day your criminal activities, no remorse, no jail time.

It's evident the income from the criminal activity outweighs the punishment and Citi's attitude is ' it's a dirty job but someone will step into our shoes if we give it up '.

Pure Theatre

Ghost of Porky's picture

The lesson? Hide it better next time.

UmbilicalMosqueSweeper's picture

Chump change. Pass Go, collect your bonus and Get Out of Jail Free card.

rejected's picture

Let's see,,, More palatable for government to accept "fines" rather than "bribes" as payoffs for the banksters fraudulent activities,,, and they get to cockadoodledoo and strut around as law enforcers for the muppets.

Squid Viscous's picture

sounds like the work of "those nice folks next door"


-David Irving

wholy1's picture

BAU! - business as usual.
Another Eric [the race-baiting place]Holder "Lolita" in drag [should be} Lynch[ed] with a large bustle under "its" dress, chump-change get-out-of-jail no-guilt plead.

Fuku Ben's picture

Of course nobody goes to jail. The bank is assessed a fine. The court takes its cut. The bank gets a tax write off. The bank raises fees or rates claiming they need to do so to cover the loss. Profits go up. Stock price goes up. Pending Exec options get exercised for moar profit. And then the next crime is exposed. This perpetual cycle of criminality without accountability needs to end permanently.

JailBanksters's picture

And where they getting money from ?

They're going to create it.

ejmoosa's picture

You only get fined if you manipulate in a manner that is contradictory to the Federal Reserve Bank.

jmo's picture

This just makes me ILL !!  Considering the trillions of wasted dollars from the multitude of 'too big to fail' banks, this ruling is just a slap in the face.  Citi will now get the decision reversed like all the others.  Nobody will pay a dime.

Norsky's picture

Nothing more than a "Pay to Play and Look the Other Way Fee". Goobermint collects a tidy sum, Citibank continues to operate. Those that were fleeced wait for the next fleecing.

metanoic's picture

Analogy : You do something wrong. You are fined by your local municipality. Your local municipality then gives you the fine money as a prize for being fined and a bunch of extra money just because.

Makes sense...

BurningBetty's picture

What's a few billions in the sea of all the's like giving a fine of $100 to someone with $100k income. It sux for a few seconds and you laugh it off.

Indd, that's what all these banks are doing; laughing it off.

TonyRUs's picture

Did any individual human being who broke the law actually get fined? Then shut the hell up.

Pumpkin's picture

When will I get my check?

withglee's picture

In Latest Market Rigging Settlement, Citi Fined $425MM For Manipulating Interest Rates

Can it get any more obvious that this is the latest funding mechanism for government that has bloated to more than 5 times its useful size?

Solution: Iterative secession.