Barclays Found To Engage In Massive Libor Manipulation, Gets Wrist-slapped By Coopted Regulators

Tyler Durden's picture

We can finally close the case on the massive Libor manipulation issue that we first brough to the world's attention back in January 2009 when we penned: "This Makes No Sense: Libor By Bank." As of minutes ago, Barclays is the first bank to admit it has engaged in gross manipulation of the key benchmark rate that sets the cost of capital for $350 trillion in interest-rate sensitive products. As the CFTC notes, as it produly announces an epic wristslap of $200 million for Barclays Bank: "The Order finds that Barclays attempted to manipulate and made false reports concerning two global benchmark interest rates, LIBOR and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period, commencing as early as 2005." Surely this massive fine will teach them to never do it again, until tomorrow at least, when the British Banker Association once again finds 3 month USD liEbor to be... unchanged. In other news, who would have thought that the fringe "conspiracy" brigade was right all along once again.

From the CFTC:

CFTC Orders Barclays to pay $200 Million Penalty for Attempted Manipulation of and False Reporting concerning LIBOR and Euribor Benchmark Interest Rates

The Order 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

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) issued an Order today filing and settling charges against Barclays PLC, Barclays Bank PLC (Barclays Bank) and Barclays Capital Inc. (Barclays Capital) (collectively Barclays or the Bank). The Order finds that Barclays attempted to manipulate and made false reports concerning two global benchmark interest rates, LIBOR and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period, commencing as early as 2005.

According to the Order, Barclays, through its traders and employees responsible for determining the Bank’s LIBOR and Euribor submissions (submitters), attempted to manipulate and made false reports concerning both benchmark interest rates to benefit the Bank’s derivatives trading positions by either increasing its profits or minimizing its losses. This conduct occurred regularly and was pervasive. In addition, the attempts to manipulate included Barclays’ traders asking other banks to assist in manipulating Euribor, as well as Barclays aiding attempts by other banks to manipulate U.S. Dollar LIBOR and Euribor.

The Order also finds that throughout the global financial crisis in late August 2007 through early 2009, as a result of instructions from Barclays’ senior management, the Bank routinely made artificially low LIBOR submissions to protect Barclays’ reputation from negative market and media perceptions concerning Barclays’ financial condition.

The CFTC Order requires Barclays to pay a $200 million civil monetary penalty, cease and desist from further violations as charged, and take specified steps, such as making the determinations of benchmark submissions transaction-focused (as set forth in the Order), to ensure the integrity and reliability of its LIBOR and Euribor submissions and improve related internal controls.

“The American public and our markets rely upon the integrity of benchmark interest rates like LIBOR and Euribor because they form the basis for hundreds of trillions of dollars of transactions and affect nearly every corner of the global economy,” said David Meister, the CFTC’s Director of Enforcement. “Banks that contribute information to those benchmarks must do so honestly. When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports that result from senior management orders to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined. The CFTC launched this investigation to protect the markets and the public from such illegal conduct, and today’s action demonstrates that we will bring the full force of our authority to bear as we carry out that mission.”

LIBOR and Euribor

LIBOR – the London Interbank Offered Rate – is among the most important benchmark interest rates in the world’s economy, and is a key rate in the United States. LIBOR is based on rate submissions from a relatively small and select panel of major banks, including Barclays, and is calculated and published daily for several different currencies by the British Banker’s Association (BBA). Each panel bank’s submission is also made public, and the market can therefore see each bank’s independent assessment of its own borrowing costs. LIBOR is supposed to reflect the cost of borrowing unsecured funds in the London interbank market.

Euribor, which is calculated in a similar fashion by the European Banking Federation (EBF), is another globally important rate that measures the cost of borrowing in the Economic and Monetary Union of the European Union.

LIBOR impacts enormous volumes of swaps and futures contracts, commercial and personal consumer loans, home mortgages and other transactions. For example, U.S. Dollar LIBOR is the basis for the settlement of the three-month Eurodollar futures contract traded on the Chicago Mercantile Exchange (CME), which had a traded volume in 2011 with a notional value exceeding $564 trillion. In addition, according to the BBA, swaps with a notional value of approximately $350 trillion and loans amounting to $10 trillion are indexed to LIBOR. Euribor is also used internationally in derivatives contracts. In 2011, over-the-counter interest rate derivatives referenced to Euro rates had a notional value in excess of $220 trillion, according to the Bank for International Settlements. LIBOR and Euribor are relied upon by countless large and small businesses and individuals who trust that the rates are derived from candid and reliable submissions made by each of the banks on the panels.

Barclays’ Unlawful Conduct to Benefit Derivatives Trading Positions

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.”

In addition, certain Barclays Euro swaps traders, led at the time by a senior trader, coordinated with and aided and abetted traders at other banks in each other’s attempts to manipulate Euribor, even scheming to impact Euribor on key standardized dates when many derivatives contracts are settled or reset.

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.

Barclays’ Unlawful Conduct at the Direction of Senior Management

The CFTC Order also finds that Barclays, acting at the direction of senior management, engaged in other serious unlawful conduct concerning LIBOR. In late 2007, Barclays was the subject of negative press reports raising questions such as, “So what the hell is happening at Barclays and its Barclays Capital securities unit that is prompting its peers to charge it premium interest in the money market?” Such negative media speculation caused significant concern within Barclays and was discussed among high levels of management within Barclays Bank. As a result, certain senior managers within Barclays instructed the U.S. Dollar LIBOR submitters and their supervisor to lower Barclays’ LIBOR submissions to be closer to the rates submitted by other banks and not so high as to attract media attention.

According to the Order, senior managers even coined the phrase “head above the parapet” to describe high LIBOR submissions relative to other banks. Barclays’ LIBOR submitters were told not to submit at levels where Barclays was “sticking its head above the parapet.” The directive was intended to fend off negative public perceptions about Barclays’ financial condition arising from its high LIBOR submissions relative to the submissions of other panel banks, which Barclays believed were too low given the market conditions.

Despite concerns being raised by the submitters that Barclays and other banks were, for example, “being dishonest by definition” and that they were submitting “patently false” rates, the submitters followed the directive and submitted artificially lower rates. The senior management directive for low U.S. Dollar LIBOR submissions occurred on a regular basis during the global financial crisis from August 2007 through early 2009, and, at limited times, for Yen and Sterling LIBOR during the same period. As the U.S. Dollar senior submitter said in October 2008 to his supervisor at the time, “following on from my conversation with you I will reluctantly, gradually and artificially get my libors in line with the rest of the contributors as requested. I disagree with this approach as you are well aware. I will be contributing rates which are nowhere near the clearing rates for unsecured cash and therefore will not be posting honest prices.”

Barclays’ Obligations to Ensure Integrity and Reliability of Benchmark Interest Rates

In addition to the $200 million penalty, the CFTC Order requires Barclays to implement measures to ensure that its submissions are transaction-focused, based upon a rigorous and honest assessment of information and not influenced by conflicts of interest. See pages 31-44 of the CFTC’s Order. Among other things, the Order requires Barclays to:

  • Make its submissions based on certain specified factors, with Barclays’ transactions being given the greatest weight, subject to certain specified adjustments and considerations;
  • Implement firewalls to prevent improper communications including between traders and submitters;
  • Prepare and retain certain documents concerning submissions, and retain relevant communications;
  • Implement auditing, monitoring and training measures concerning its submissions and related processes;
  • Make regular reports to the CFTC concerning compliance with the terms of the Order;
  • Use best efforts to encourage the development of rigorous standards for benchmark interest rates; and
  • Continue to cooperate with the CFTC.

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SeverinSlade's picture


Almost as bad as Wachovia getting slapped on the wrist for laundering billions in Mexican drug cartel money.

Zaydac's picture

And a huge feather in the Tylers' caps.

gmrpeabody's picture

Maybe it's just me, but Bart Chilton looks like he just stepped out of a Tim Burton movie.

Zaydac's picture

And a huge feather in the Tylers' caps. I really don't think I saw this anywhere else except ZH.

SeverinSlade's picture

You can't find half of what ZH posts anywhere else.

Remember, CNBS refers to ZH as the "fringe conspiracy theorist blogosphere."  Interesting that fringe conspiracy theorists are proven right again, and again, and again...

What's even more interesting is how, even after ZH is proven accurate, CNBS and other propaganda outlets never give them credit.  It's almost as if they're intentionally ignoring it...

Cursive's picture


Remember, CNBS refers to ZH as the "fringe conspiracy theorist blogosphere."

ZH is the financial press's 800 pound gorilla with a chainsaw penis.

SeverinSlade's picture

Chainsaw penis complete with sidewinder missiles.

Bastiat's picture

. . .  and frikkin' laser beams.

azzhatter's picture

their masters won't allow them to acknowledge ZH when it's correct. Kernan, Squick, and the rest of CNBC are just the useful idiots

Bastiat's picture

The report what they are told to report.

matrix2012's picture

There is no such thing in America as an independent press. You know it and I know it. There is not one of you who dares to write your honest opinions, and if you did, you know beforehand that it would never appear in print. I am paid weekly for keeping my honest opinion out of the paper I am connected with. Others of you are paid similar salaries for similar things, and any of you who would be so foolish as to write honest opinions would be out on the streets looking for another job. If I allowed my honest opinions to appear in one issue of my paper, before twenty-four hours my occupation would be gone.

The business of the journalists is to destroy the truth, to lie outright, to pervert, to vilify, to fawn at the feet of mammon, and to sell his country and his race for his daily bread. You know it and I know it, and what folly is this toasting an independent press? We are the tools and vassals of rich men behind the scenes. We are the jumping jacks, they pull the strings and we dance. Our talents, our possibilities and our lives are all the property of other men. We are intellectual prostitutes. -- John Swinton, the former Chief of Staff, The New York Times, New York Press Club.

William113's picture

The Mexican Cartels got weapons from the American Government and the Government is run by the banks receiving the money from the Cartels. That's neato.

Its to bad they had to kill Border Patrol Agent Brian Terry.

This shit going to end and its not going to be pretty.

Dingleberry's picture

Anyone besides me getting "bankster scandal fatugue"? And once again, no one goes to jail.


mkkby's picture

They manipluated rates lower, which is encouraged because one effect is to keep the policians in power.  If they had manipulated it higher, they'd be labeled terrrorists and punished severely. 

Just like stocks going up -- we love the free market.  Stocks going down, demonize and ban shorts until we get the results we wanted.

Iwanttoknow's picture

Gee.I thought only BCCI did  that kind of thing.

azzhatter's picture

Such a heavy fine. Barclay's is giggling in the boardroom

GeneMarchbanks's picture

Ah, The City. I'll be waiting for the upcoming Farage rant about this very issue.

Gringo Viejo's picture

In a unrelated story, criminals Hatch & Rangel are back in business courtesy of a coopted elective process.

johnQpublic's picture

if it wasnt for conspiracy theory's we would know no truth at all

Gromit's picture

Facilitators not regulators.

web bot's picture

What is so, so, so disturbing about this is that it happened. LIBOR is the staple for interbank lending. Given that some smart bankers and their legion of geeks (no, not Greeks) could pull this off, is sickening. I'm sure we'll see some Dimonesque leader from Barclays chiming about "mistake in judgement", "important that the markets operate efficiently" and the like.

Does anyone on here still think us holders of PMs are still a bunch of nuts?

DeadFred's picture

Many will still think you're nuts even after they've burned their last FRNs in the homeless camp firepit. Don't give them a thought.

overmedicatedundersexed's picture

regulators are in deep demand at the tbtf banks, hand washing and back washing continues

JohnG's picture

And Madoff is in jail why?

DeadFred's picture

Not a member of the club and he stole from members of the club.

orangedrinkandchips's picture



yea, why? Actually he did us a huge favor. Of course not the suckers who just sign a check to a "friend" willy-nilly.

Yes, he did us all a big favor by giving us a peak at what really happens in the real world.

I mean your typical "financial advisor" is just a poor schmuck who doesn't know up from down but is very bullish on this market. OF COURSE!



So this schmuck has his clients in equities and he is sitting in muni's and cash?


People have nobody to blame but themselves.....period.

Sudden Debt's picture

... I don't know... that coloured guy who just passed by looks mighty guilthy to me...


Winston Churchill's picture

He ripped off the 1%.

Laws are only for the serfs, and people that rip off the 1%.

Get with the program.

Dingleberry's picture

Madoff went to jail to keep from being killed by some unsavory characters that he stole from. Remember, he turned himself in and confessed.  When have you ever heard a banker do that? EVER!?  

Regulators had the case against him gift rapped and put under the tree for a decade. They didn't care.

Papasmurf's picture

Because he stood in the middle of Park Ave and announced he was a ponzi. 

orangedrinkandchips's picture

The whole interest rate structure is fucked.

Normally, like Italy and Spain, investors, in theory, ASK FOR HIGHER RATES TO COMPENSATE FOR RISK.


I just got out of Junior High School as I just learned this stuff so bear with me, lol.

Now we have higher risk (not just what it looks like) and nothing to compensate you for the risk....nothing. Literally nothing.


And they rig the LIE-bor bids? JUST SINCE 2005??? OHH YEAH...RIGHT....SURE...


NEVER BEFORE 2005....200MM??

It's getting so obvious that this is such bullshit it's actually getting good.....


stay tuned!

lizzy36's picture

The don't have to admit manipulation (cough fraud), the slap on the wrist is for "misconduct".

Brad Chilton should go back to Die Hard circa 1988 where he belongs.

alibi's picture

what dollar amount could one place on this manipulation over 2 or more years? what percentage of that amount would the 200 million dollar fine represent?

DeadFred's picture

It almost sounds like they were the good guys. They were the only bank putting their heads above the parapet and management said "get your submissions in line with the other lying thief banks". I wonder why they flatlined the LIBOR this year, at least last year when the rate slowly rose they were able to con people into thinking it might be real. Now everyone has to know they're lying. I'm a bit surprised by there being a fine at all since I assumed the Governments were in on the rigging and maybe even ordered it as part of their strategic deck-chair-rearranging plan.

Robslob's picture

Why these assholes never state simple truths?

1) $xxx made from manipulation
2) $ooo fined for manipulation
3) $ net-delta for being a society destroying leach


DOT's picture

Now that the "Regulators" are finished maybe I will be getting one of those post cards from an attorney notifying me that I may be entitled to a cash settlement.
Any one who has used any credit in the last 1o years is probably a member of the class.

Mordan I's picture

All the stops are out.

Dr. Engali's picture

I am shocked.... Shocked that a bank would do something criminal. Only to pay a traffic ticket and sent on their way.

mkkby's picture

They print the ticket and the fiat to pay the fine all at the same time.

pods's picture

What is 0.001% of a couple of hundred billion between friends.

Of course, the same argument can be made for the FED banks skimming a tiny percentage from all savers in the USA.  Of course that is legal.  Interest rate targets, LSAP and such.


lotusblue's picture

Unbelievable in it's corruption! No heads rolling.

CFTCs' Chilton said thier investigaive people found this-COMPLETE lie

A Barclays employee came forth to the press!

Total $454million-chicken feed to the amount garnerred over the years from this scam!

Additionally,I seem to recall other banks implicated or self implicated in this smelly piece of vomit!

No Jail for anyone-the Chinese would have shot'em all.Except if from ruling families.Hahaha- we're fucked!

tocointhephrase's picture

 "The CFTC launched this investigation to protect the markets and the public from such illegal conduct, and today’s action demonstrates that we will bring the full force of our authority to bear as we carry out that mission.”



DOT's picture

WTF! tossed you a green and I got tossed back up to the top of the page.

tocointhephrase's picture

WTF, I tried to edit my post (below) and tol;d DENIED!

matrix2012's picture

tocointhephrase, post cannot be edited once there's a reply on it.

tocointhephrase's picture


williambanzai7's picture

I suspect they are looking at substantial private litigation as a result of this.

This is how a primary dealer is supposed to behave I suppose. Certainly not as dangerous a Egan Jones, right Mary?