Lieborgate: Here Come The Arrests

Tyler Durden's picture

For over four years, virtually everyone in the finance industry knew that Libor was manipulated. The stench of manipulation rose to the very top and thanks to a document release of formerly confidential information, we now know for a fact that even the Fed was in on it - recall that as part of production, the Fed provided a transcript of an April 2008 phone call between a Barclays trader in New York and Fed official Fabiola Ravazzolo, in which the unidentified trader said: "So, we know that we're not posting um, an honest LIBOR." And yet without any tangible, black on white evidence, there was no catalyst for pursuing legal action. That all changed when in a desperate attempt to protect its ass, Barclays decided to rat out everyone by settling with regulators, and "turn state" producing e-mail based evidence, most of it quite visual (after all what is more tangible to the common man that evil bankers sipping on Bollinger), which essentially threw years of quiet cartel cooperation under the bus. As a result, regulators, enforcers, and legal authorities, many of whom were in on this manipulation from the beginning, no longer had an excuse to not pursue civil and criminal charges against perpetrators, who until recently were footing the tabs at various gentlemen's venues and ultra expensive restaurants. And while the imminent waterfall of civil prosecution will force bank litigation reserves to go through the roof, here comes, with a very long delay, the criminal charges. As Reuters reports, here come the arrests.

But before we get into it, we wanted to share something mildly curious involving that British Bankers Association: the entity that until recently at least, was implicitly in charge of the Libor fixing, submission, and distribution process (also the entity that will quite soon be non-existent). It involves the BBA's self-professed Governance process and obligations. The extract below shows what it is currently.

All aspects of the operation and management of bbalibor as a benchmark are the responsibility of the independent Foreign Exchange and Money Markets Committee ('FX&MM Committee'). This includes design of the benchmark and the governance and scrutiny of all bbalibor data and all panel bank contributions. BBA LIBOR Ltd undertakes the day to day running of the benchmark under the supervision of the Foreign Exchange and Money Markets Committee. As of 1st January 2010, BBA LIBOR Ltd. has been governed by an independent Board.


Thomson Reuters - the 'Designated Distributor' of BBA LIBOR - is tasked with collecting the daily submissions that are inputs into the bbalibor process and submitting them to rigorous checks before publishing the resulting calculation to the market. If any bank submission falls outside a defined set of parameters, Thomson Reuters will consult the contributor and request confirmation that the rate provided is correct, thus allowing any simple typing errors to be amended promptly. These parameters are agreed by the FX&MM Committee and are regularly reviewed to ensure they reflect prevailing market conditions and maintain the highest level of scrutiny over the rates.


There is a named individual at each bank responsible for submitting the daily bbalibor rates to Thomson Reuters and this will be the person responsible for the bank's cash - usually their title is 'treasurer' or similar. There is written guidance on what information that person should take into account when calculating that day's rates for his or her bank. As all contributor banks are regulated, they are responsible to their regulators, rather than BBA LIBOR Ltd. or the FX&MM Committee, for maintaining appropriate procedures for contributing, including the maintenance of internal chinese walls.

The reason we have bolded the third paragraph is that if one had gone to the BBA's Governance section as recently as a few weeks ago, or prior to Liborgate becoming front page news, the paragraph read something totally different. However, courtesy of the Way Back Machine, we have a great idea of just what the BBA quietly and under the radar tried to change vis-a-vis its own obligations and responsibilities in the Libor scandal. This is what the third paragraph said before.

BBA LIBOR Ltd. receives the fixings and underlying contributor data at the same time as all other live data recipients and monitors all submissions into the fixing process. Any anomalous rates are queried with the submitting bank, and a log of these queries is kept and given to the FX&MM Committee on a periodic basis, who may choose at their discretion to follow up these queries in line with established governance and scrutiny procedures.

Up until literally minutes ago, the question to be asked was why was this change made on the page, on a governance page of all places, a change which shirks responsibility and accountability and begs the question, did BBA log any queries of anomalous rates, did the FX&MM Committee follow up on any queries, or are they simply trying to bury something here? Now, thanks to Reuters, we know.

With arrests on deck, the BBA is doing everything it can to distance itself from what it knows with absolute certainty is about to be a shitstorm of epic proportions:

U.S. prosecutors and European regulators are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rate-rigging scandal.


Federal prosecutors in Washington, D.C., have recently contacted lawyers representing some of the individuals under suspicion to notify them that criminal charges and arrests could be imminent, said two of those sources who asked not to be identified because the investigation is ongoing.


Defense lawyers, some of whom represent individuals under suspicion, said prosecutors have indicated they plan to begin making arrests and filing criminal charges in the next few weeks. In long-running financial investigations it is not uncommon for prosecutors to contact defense lawyers for individuals before filing charges to offer them a chance to cooperate or take a plea, these lawyer said.


The prospect of charges and arrests of individuals means that prosecutors are getting a fuller picture of how traders at major banks allegedly sought to influence the London Interbank Offered Rate, or Libor, and other global rates that underpin hundreds of trillions of dollars in assets. The criminal charges would come alongside efforts by regulators to punish major banks with fines, and could show that the alleged activity was not rampant in the banks.

Actually what it will show is that criminal activity was not only rampant, but everyone knew about it, certainly the regualtors, and most certainly the Fed and the BOE. After all how could they not: they are the ultimate entities who manipulate rates. But for them it is a matter of "policy." As such they are desperate to throw anyone under the bus, as long as public attention is redirected from them.

So where will the first arrests come? Why the world's biggest bank of course.

The source familiar with the regulatory investigation in Europe said two traders who have been suspended from Deutsche Bank were among those being investigated. A Deutsche Bank spokesman declined to comment.

Then, once DB is down and out, next it will be a turn to not only break up of the IR derivative trading cabal in Geneva, which Zero Hedge exposed first, but also extract a solid fee from the Swiss banks in the process.

The Financial Times reported on Wednesday that regulators were looking at suspected communication among four traders who had worked at Barclays, Credit Agricole, HSBC and Deutsche Bank.

And so the tide turns, as banks, all of which should have ended up as bailed out utilities in the aftermath of the Lehman collapse, will now be forced to fork over billions in cash to the same governments and administrations that bailed them out in the first place, under the guise of civil and criminal penalty disgorgement in what will almost certainly end up as the biggest financial settlement in history, one which will leave most of the world's banks sorely undercapitalized and force the Basel implementation of various capital requirements to be scrapped indefinitely.

But for now, the public will get its circus (if not corn bread: its price is about to shoot right to the moon courtesy of prayer not being a viable strategy when it comes to procuring rain... or central bank intervention) courtesy of an imminent procession of perp walks. We, for one, having waited nearly 4 years for just this, can't wait.

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I am Jobe's picture

How about Ben Donkey, Timmy , JPM, Pandit and many more in the fiasco. Just a how piece. Until public eecutions takes place this is boring shit.

Careless Whisper's picture

The Careless Whisper AHEAD OF DRUDGE SUNDAY REPORT & Threadjacking

SWAT Team Surrounds House Of Possible Psycho Joker Accomplice; Police Deny

Warner Bros. Private Sigh Of Relief; Grosses $160 Million Over Weekend For "Dark Knight"

Exclusive: Gun Range Application Of Crazy Joker Shooter Indicates NOT An NRA Member

Adult Friend Finder Dot Com Confirms Psycho Joker Profile; Says They Have Not Been Contacted By Police






Careless Whisper's picture

@ I am joe

Only low level traders going to be charged; makes headlines. This is a crime syndicate.

DoChenRollingBearing's picture

Continuing the threadjacking...

Below is my review of Barron's, for anybody still foolish enough to "invest":

The Monkey's picture

Great news for the political / regulatory environment for banks. Buy the dip.

Manthong's picture

What really matters is how much hush and bribe money the PTB can conjur up to make certain folks trade their reputation for an obscure, but comfortable future after falling on their sword and spending some time on ice.

I don’t expect to see any heroes arise to shine enough light of truth on that black hole to clean anything up

Thomas's picture

Rode in an hotel-airport shuttle with prominent UBS banker. If I had known earlier in the trip I would have been eating his face like a zombie.

engineertheeconomy's picture

News nowdays full of diversion tactic stories originating from Bernankes bosses

 Look, over there!

No, look... over there!

Homeland security would neeevvver be involved in something like this now, would they?

They're all crooks folks, every last one of them from the bottom to the top

They're not going to arrest themselves

Stay focused on the real news story of the last 100 years, the counterfeiting of Quadrillions and Quadrillions for the very same criminals that foreclosed on your home and are now  offering to rent it to you while you adjust to your new job at Mc Donalds


Dr Benway's picture

Hahaha this will be like the War on Drugs - small time dealers get busted sometimes, the big money goes free.


By now the financial industry is too far infiltrated into government, media, regulators. It's like the old TV series V. The cephalopods have taken over.

Precious's picture

Too big to fail?  

How about too star to pound. That's what these criminal executives are.  

...................... 2*2#

tmosley's picture

I'd rather make hash of them.



economics9698's picture

I think the charges are bull shit but if some bankers get arrested I will not protest.  Fuck em, let them burn.

Next time arrest the ECB and Fed bankers, all of them.


StychoKiller's picture
"Many can't go there; and many would rather die."

"If they would rather die," said Scrooge, "they had
better do it, and decrease the surplus population.
Besides--excuse me--I don't know that."
Pinto Currency's picture


The real story is the rigging of the gold market for decades.

Libor is a distraction.

AldousHuxley's picture

They already played the "that black kid did it" card with Kweku Adoboli at UBS.


Is there a job posting for bank of england looking for muslim economics student who is looking to take the blame, go to jail for 10 years, and his family gets paid $10M?


This is mob style operation with the "fall guy".....because banksters are just legalized mobsters.

cynicalskeptic's picture

Only the peons are turned into Soylent Green - to feed the other peons.   Meanwhile the ruling class still has caviar and champagne.

jeff montanye's picture

best line in post, imo, "And so the tide turns, as banks, all of which should have ended up as bailed out utilities in the aftermath of the Lehman collapse..."

favorite part? which not whom.

AldousHuxley's picture



The film stars Lewis H. Lapham, who plays himself as editor of Harper's Magazine. Lapham opens the film with the question of whether or not America has a "ruling class," a circle of wealthy and powerful families that run the banks, businesses, and government, essentially controlling everything in America.

PiranhaEatingGoldfish's picture

Virtually ALL news stories can be lumped into one of two categories: Fear and Distraction. There is hardly a story that comes across the waves that cannot be lumped into one of these two categories and sometimes the architects get their wet-dream scenario; a story that fits into BOTH categories. A perfect example of the wet-dream story is the one which is now running in the U.S. about the Batman movie shooter having purchased all of his weapons legally.

This is great because so many sheeple will be fearful of anyone who appears to be smart and socially withdrawn that you will begin to see the initiatives to force more social interaction and focus less on self and more on groups. Where have I heard that before?

Now comes the Distraction. American sheeple are going to look at stories about LIBOR and other similar stories and ask why they should care about these "white collar" criminals. The real threat is the lone nuts out there and all the people they are planning to kill. Fast & Furious, LIBOR, IMF bailouts of cooked book governments? Why talk about those? Let's focus on the "real" issues.

Before anyone goes accusing me of not knowing what Americans will think and say, I am an American, so I know what the temperature of the country will be in regards to these sorts of stories.

This alleged shooter is exactly what the politicians and puppet-masters were waiting for at this exact time. Am I saying he was set in place by these guys? No. It seems to be something to consider, or he could just be a disturbed individual that fell into their laps, like Christmas in July.

I truly feel sorrow for the people who were killed and injured in the shooting. It was horrific and something that people should deal with. The shooter needs to be punished swiftly and in the most sever way allowed by law. But I wonder just how long this stays in the headlines, while bankers and fat-cats are getting away with large scale, global financial felony crimes, and nobody raises more than a peep.

AldousHuxley's picture

propaganda works like this: tell 99% of truth, mix in 1% of your own agenda


Fear is the strongest motivator for the masses

religion is based on fear of hell: if you don't stay "moral" as defined by the church (99%) and pay tithe (1%), you will go to hell (fear)


government is based on fear: if you don't follow the law as defined by the elites (99%) and pay taxes (1%), you will go to jail (fear)


corporations manage based on fear: if you don't work hard (99%) and kiss ass (1%), you will be fired (fear).



you will experience freedom once you free yourself from irrational fear. revolutionaries are those who had the balls to be not afraid of hell, jail, or employment

Not Too Important's picture


Now that made me laugh! Brilliant!

Bath salts, anyone?

Jena's picture

Keep a packet in your pocket just in case, for flavor enhancement?

mademesmile's picture

"Rode in an hotel-airport shuttle with prominent UBS banker. If I had known earlier in the trip I would have been eating his face like a zombie."

You could always say the bath salts made you do it.

gmrpeabody's picture

Only the soldiers get punished. The generals giving the orders get early retirements, with all benefits, of course.

James_Cole's picture

Probably, but there's still hope. Though the reuters article sort of makes it clear how this will be played.

""The individual criminal charges have no impact on the regulatory moves against the banks," said a European source familiar with the matter. "But banks are hoping that at least regulators will see that the scandal was mainly due to individual misbehavior of a gang of traders."

"In the United States, the regulatory investigation is being led by the Commodity Futures Trading Commission, which has made the Libor probe one of its top priorities"

The question is who will they blame when it's computers running everything? Fat finger fat finger!

The good news is the civil case looks to be very damaging.

CH1's picture

but there's still hope.

Respectfully, forget about it. That hope involves one branch of the crime family inflicting true justice on another branch of the same family. Ain't happening, exceot for show.

There is hope in individuals who stop serving a corrupt system and build better systems for themselves. But not from the state - that's an old, barbaric scam that should be abandoned to its long overdue death.

Manthong's picture

"the regulatory investigation is being led by the Commodity Futures Trading Commission"

And it is right up there in priority next to that hot 7 year long silver market manipulation probe.

HardAssets's picture

"Yes there IS a Santa Claus, I know there is ! My Mummy told me so, and she wouldn't lie." - - - quote from little girl in traditional holiday movie replayed multiple times every December.

HardAssets's picture

CFTC 'top priority'

kinda like the CFTC and the manipulation of the silver market

Now how many years has that 'investigation' been going on ?

Disenchanted's picture




In the United States the result of the Lie-borgate scandal will be a dog and pony show with the illusion of something having been done. As Glen Ford of the Black Agenda Report points out here:



Obama’s Justice Department Rushes to the Rescue of LIBOR Criminals 

By Glen Ford


July 18, 2012 "Information Clearing House" --   The Obama Justice Department is in theater mode, again, pretending to threaten the bankster class with criminal penalties – prison time! – for their manipulation of the global economy’s benchmark interest rates. The Justice Department claims to be building criminal and civil cases in the LIBOR scandal, which in sheer scope is the biggest fraud by international capital in history. But that’s all a front, a farce. Barack Obama has spent his entire presidency protecting Wall Street, starting with his rescue of George Bush’s bank bailout bill after it’s initial defeat in Congress, in the last days of Obama’s candidacy. He packed his administration with banksters, passed his own bailout and, in collaboration with the Federal Reserve, channeled at least $16 trillion dollars into the accounts of U.S. and even European banks – by far the greatest transfer of capital in the history of the world. Obama has reminded the banksters that it was he who saved them from the “pitchforks” of an outraged public. He pushed through Congress so-called financial reform legislation that left derivatives – the deadly instruments of mass financial destruction that were at the heart of the meltdown – untouched.

Wall Street may or may not remain loyal to Obama, but Obama has been loyal to Wall Street, the guys who gave him the campaign cash to become a viable candidate. His Attorney General, Eric Holder, a corporate lawyer to the core, is busily staging a pre-emptive LIBOR prosecution of bankers in order to shield them from legal action by a host of other government agencies and, ultimately, from the global universe of parties that have been harmed by the bankster’s schemes– a list that stretches to infinity. Holder’s job is to monopolize the LIBOR case, to the extent legally and humanly possible, grabbing jurisdiction and consolidating the cases against the banks with the aim of reaching a settlement that does not further destabilize the financial system.

Holder and his boss already pulled that trick earlier this year with settlement of the bank “robo-signing” scandal – a scheme that would have ranked as the “crime of the century” until LIBOR came along. A small group of state attorney generals were holding up an administration-brokered settlement that effectively gave the banksters immunity from prosecution, in return for a measly $25 billion payout. Obama used every power of his office to pressure the state law officers into line. The last one capitulated with a promise from Obama that a “special unit of prosecutors” would expand the investigation into abusive mortgages practices. You haven’t heard a peep about it, since.

Now Obama and Holder are playing the same diversionary game, making tough noises about criminal investigations of the LIBOR conspirators. But the Justice Department has already given immunity to Barclay’s Bank, of Britain, and to the Swiss banking giant UBS. More immunities will follow. The reason Eric Holder is staging criminal investigations is because that’s the only way he can protect the bankers, through immunities and by gradually narrowing the scope of the case. In the end, there will be settlements all around, and the banksters will move on to even more fantastic heights of criminality – thanks to the loyal, protective hands of President Obama.

BAR executive editor Glen Ford can be contacted at

This article was originally published at Black Agenda Radio

also here:

DoChenRollingBearing's picture


@ Junkers!  


Stephanie Pomboy...  Read before you junk, too bad I could not put her picture in...

Muppet Pimp's picture

Nice review DCRB.  The burgeoning juice industry is a popular subject in stock pump propaganda I get in the snail mail lately. 

DoChenRollingBearing's picture

@ Careless

You are right, no major perps will be arrested. 

DeadFred's picture

Back in the day when the various European royals fought wars against their cousins in other countries it was considered bad form to actually harm members of the royal families. That's what the Good Lord put commoners on the earth for. Now we're seeing the elites starting a war amongst themselves, this would not have come to light without high level authorization. Likely the new royal families will escape harm this time as well.

My money is on Goldman, figuratively that is, I would never stoop low enough to invest in the Heart of Evil. Goldman has the pull with the MSM and the politicos to get this done and they have very little exposure to LIBOR. Time to dine on the carcasses of their brethren. Want to bet that Barclays didn't have some heavy short positions (hedges of course) on the other LIBOR banks before this broke? It's great fun to watch the sharks turn on each other even if we will ultimately get stuck with the tab.

 Does anyone know how this might affect the whale position? I don't see a connection but the timing is suspicious.

Tijuana Donkey Show's picture

Unless they tank their stock, and go back private with the help of Mr. Buffett. Why not fuck the shareholders one last time on your way out?

disabledvet's picture

"there's never just one cockroach." turned out to be DB...and apparently UBS according to even the NY Times now.

The Navigator's picture


"it was considered bad form to actually harm members of the royal families. That's what the Good Lord put commoners on the earth for"

Agree with your history but today we have a different information system (the interweb) and those that have fucked us over are easily found, and they will be found.
This time will be different. 

spastic_colon's picture

all just political diversion to take your eye off of the upcoming elections and continued socialization of the USSA

monoloco's picture

I'm surprised they haven't blamed it all on the janitorial crew yet.

knukles's picture


Dude, that's disclosing confidential, material, non-public information!
Off with your head!

Dermasolarapaterraphatrima's picture

They finally narrowed it down to the little brown guy in the corner office who did the Quadrillion $$$$ LIEBOR manipulating.


I feel safer now.

nasa's picture

 Monday might be a good day to call in brown. 

JohnKozac's picture

Photos of the "Quadrillion Rogue Trader" just released:


....looks guilty as sin! Give him a 'fair trial,' and then execute him.

disabledvet's picture

Well Diamond was fired...easiest way to "make it go away" is to blame him for everything. "start arresting the low level guys" and all juicy tidbits come out. Which of course is EXACTLY what we want in these here parts. stop denying our source material!

Mr. Fix's picture

“Here come the arrest”?

 I'll believe it when I see it!

 Too many skeletons would be exposed if any of these creeps were in fact arrested,

 those doing the arresting have been in on it all long.

 I suspect this will all go the same way as John Corzine.

 This is a good example of where law enforcement needs to be completely bypassed.

 Time to go straight to public hangings.

XitSam's picture

I'll believe it when I see people arrive in prison. Not an arrest, not a conviction, not a sentencing, not a fine, not a suspended sentence, not probation.  Only when they arrive in prison.

RiverRoad's picture

Obama needs to throw a lot of people under the bus to get himself properly reelected.  It'll be interesting to see who he chooses.