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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Joseph Jones's picture

Above might be too much fun.

Or...there's always something like the following:

In the early years of the so-called "Reformation" (date is historically false...reformation "heresy" started immediately after Constantine's "Romanism") Martin Luther's letters allowed the Anabaptists to meet privately (conventicle) and to ban paedo-baptism.  A mere seven years later dear lovely little Martin wrote letters codemning the same persons to death for their practices, which Martin considered heresy. In other words, Martin actually liked the violent practices of the Popes he said he wanted to reject.

A few years later there was a Dutch "heretic" who changed his name to avoid the Calvinists from burning him at the stake.  This man wrote scathing articles using Bible vs. to prove Calvini's errors in blending together the rule of "king" or state with the rule of the "preist" or eklessia (see Servetus' burning at the stake, which took hours per eye witness).   

After the Dutch lover of Christ died broken and penniless, the Calvinists discovered his true identity, raised his body from the grave, and burned the remains. 

They showed him, didn't they? 

Boxed Merlot's picture

dear lovely little Martin wrote letters codemning the same persons to death...a Dutch "heretic" who changed his name to avoid the Calvinists from burning him at the stake...wrote scathing articles using Bible vs. to prove Calvini's errors ?...?


The discussion of international wealth destruction, corrupt interest setting tactics and other intrinsically evil human endeavors are a strange juxtaposition against the historical development of the bride of Christ in this day and age, but it probably should be of no surprise.  The ekklesia continues to be the gathering place of the called out ones to whom these events have nominal if not amusing ramifications to/for.  Seriously, there are things worse than death.

It is from these/this that the Christ came to save.




Joe A's picture

Everywhere around the world we should be hearing the sounds of gallows being made and prepared.

resurger's picture

ill dust em off for free, just tell me where they are


RiverRoad's picture

I got my knitting needles greased.

BurningFuld's picture

You know they still have some of those guillotines in Paris...................

Things that go bump's picture

Something ugly is coming our way and soon, but this has to be done.  Those banks have to be broken up and sold off. Cost is immaterial and financial institutions can never be allowed to grow too big to fail again.  Those institutions are run by sociopaths and one of the characteristics of that breed is that, exactly like serial killers, they like what they do and will continue their chosen behavior until they die or are physically stopped. This should have been dealt with 4 years ago. You can't just clean up their mess and let them go on their merry way hoping for better behavior.  They have no discretion and can't learn from their mistakes.  If the government doesn't deal with this, the people will be forced to.  

Grey-Ghost's picture

Even if they prosecute some low level crooks and even if they sacrifice one of The Financial Crime Cartel bosess (a highly unlikely scenario) there's isn't a ray of hope something REAL will change.

The Congress of the United States is a treasonous poison (taking a bribery is a treasonous offence, only those criminals call it "financial contributions" / lobbying, garbage like that) and one fascist two wings (Repulsive and Despicable) party system will not vanish overnight.

The whole country is run by the socipath criminal murderers and the whole world suffers because of it. Ponder how many people lives out of the Behemot: millions in the military, millions in the police state aparatus, thousands in every building in the NYC, FCC related, hundreds of companies would not survive without the military complex and its murdersous machine; the housing is almost 100% controlles by the government and would collapse manana if the subsidies to the FCC subside; the media is totally bought out and belongs to the six behemot corporations and the nation of boiled frogs, f.k.a. Americans, does not even utter a croak of protest.

The demise will continue until the day iPhones go black and the zombies rise. Do not get me wrong; I would give a year of my life just to be wrong... but I sincerely think we've lost. (humanity)

Things that go bump's picture

I don't really believe that there is any hope of government doing the right thing here since government is a wholely owned subsidiary, but revolutions are nasty, messy, unpredictable and invariably bloody undertakings, I still have hope. Better those bad men and their minions go sit themselves in jail then fall to the mob and their families with them. Mobs are notoriously merciless.   

engineertheeconomy's picture

"Revolutions are messy"

are you a boy or a girl?

one more thing here... we the people of the United States, are not a "mob"


Things that go bump's picture

Not yet.  Haven't you been paying attention?  There is talk of lynchings and Guillotines for crying out loud and not just here. Our government has passed into the possession of other hands than we the people and we are going to be hard pressed to get it back.  

Things that go bump's picture

And that, my dear, is called an ad hominem attack, the sort used by children when they have run out of verbal ammunition and have to resort to name calling.  

MsCreant's picture

Redacted. Once a fight starts no one should interfere.

Apologies Bump and Econ

Likstane's picture

Not much of a fight. Judge Likstane see's it as TKO in Bump's third post. 

Things that go bump's picture

I think I offended his patriotism in some fashion that he wasn't quite able to articulate.    

Clashfan's picture

Thanks Samsara. Interesting piece, but is he correct about blaming Rubin for all of this and the repeal of GS? I have read other accounts that say GS would not have stopped all of these shenanigans.


StychoKiller's picture

Hmm, that's when the Federal Reserve apparatchiks get a new cell in sunny GITMO (Treason!)

engineertheeconomy's picture


He could?

Where have you been friend?

Obummer was counterfeiting and playing loanshark before he was even born

The first thing he did when he got out of his mothers womb was steal her Gold jewelry right there on the table

get a grip

Will To Live's picture

Make Millions of dollars, pounds, whatever.  Then go to a Country Club prison for a year. Work on your tan, buff up, lift weights, do power Yoga, write your book etc.  Thats brutal man, just brutal.

potlatch's picture

they can do those juice fasts they've always been meaning to work on.  A nice year long detox is what most of them do when they hit their number, anyway. 

Dr.Engineer's picture

Let's hope the rats start feeding on one another and that there are some Attorney General's who want to be governor.

JLee2027's picture

The only good I can see is if those manipulating other markets at the behest of their crime lords (Gold/Silver/DOW) start to realize they are eventually going to be thrown to the wolves, so it's time to blow the whistle and get out of Dodge before the hammer comes down.

battlestargalactica's picture

Never. Gonna. Happen.

The large fry will skate and claim they didnt know what was happening. The medium fish will find a middle level scapegoat that will likely face some sort of fine, but doubtful. The small fry will probably get fired and fined severely, especially those that aren't anglo or might have been boning some pissed off middle-level guy's ex-girlfriend.

The DoJ will do nothing; they got their ass to cover from F&F, and new drones to roll out to watch cows, and raw milk consumers and organic farmers to SWAT team. The SEC will do nothing; they have their 'hands full' with hot midget on midget action.

It's like kicking at a rusted out bumper (anyone remember those?)... You dont realize how rotted and useless that rusty piece of impact-bearing metal is until you give it a good whack, only to find youve broken straight through. All thats left of it is a gaping hole and pile of of reddish, rotten metal dust on your driveway. Can't be fixed. Gotta be replaced.

Spastica Rex's picture

Steel bumpers - I remember those. They reduced the cost of auto body work.

Landrew's picture

To finish your sentence, "They reduced the cost of auto body work and incresed deaths by a factor of ten"

tenpanhandle's picture

didn't know there were any yugo owners still around. 

malikai's picture

They're all playing bridge with the Pinto owners high in the sky.

DeadFred's picture

This is an epically bad time to be an up and coming trader in a LiBOR bank who happens to be of Nigerian descent.

JustObserving's picture

Will we ever get any arrests for the manipulation of the silver market?  The investigation has been going on for 4 years now.  If Libor rates were being set in New York instead of London, US regulators would be busy watching porn.

engineertheeconomy's picture

Silver does not exist because the United States government says it doesn't exist, OK?

Look, over there... chinese people... they have slanted eyes... and eat rice!

get it?

yogibear's picture

Where's the head criminals, the ones heading the central banks? Bernanke should be in an orange jumpsuit, he knew about it and decided to do nothing. If you go back before Bernanke, Greenspan knew about fraud with LIBOR as well.

sangell's picture

Well we have the Deputy Governor of the Bank of England admitting he called Bob Diamond to get Barclays to submit , er does one put it, 'alternative' Libor data for the general good. What's Bob Diamond to do tell him to 'fuck off'?

Let The Wurlitzer Play's picture

I cant wait till they arrest bernanke and geithner.... Ha!!  Ha!!!


Mr. Fix's picture

Don't hold your breath too long, that would not be good for you.

  They are the law in a lawless system.

 Nobody is coming for them.

nmewn's picture

"I cant wait till they arrest bernanke and geithner"

Good point...they both knew about it in 2008...aiding & abetting.

knukles's picture

I'm no lawyer (been called worse) but isn't the after the fact changing the wording of the BBA's so called review and control procedures to ensure a "truthful" representation of the postings fraudulent/self-admitting to such?

nmewn's picture

I've been called a lot

Yes, tampering with or destroying evidence is in itself a crime. But you have to prove they did it to cover something up...not just error, incompetence or happenstance. But you're right, no need to change well thought out procedure/practice unless one is trying to shift blame or hide something...its almost an admission of guilt to something.

I like those Way Back Machines almost as much as the people who use them ;-)

StychoKiller's picture

The internet never forgets -- the list just keeps growing longer...

eftian's picture

I`m afraid nothing is gonna happen until we get out our pitchforks and torches and burn the monsters..

potlatch's picture

they've already prepped putting bath salts into the water supplies.  This way when they turn the hoses on us, we just start eating each others' faces and zombify-eliminate the uprising

1Inthebeginning's picture

Constructive action will move us forward.  If you have a knot in a rope, the best way to untie it is to loosen the knot.  If you pull on both ends of the rope your just going to make the knot tighter.  Don't give these people any justification.  Their ready for you.  

Lednbrass's picture

.40 cal doesnt mean squat, those pistols are popguns with very limited range and only scary to anyone who doesnt spend much time around firearms.

Far more worrisome is the large scale purchase of .223.

knukles's picture

Nobody fucks with the City.TM

tenpanhandle's picture

wish I had a trash can like that.

Drag Racer's picture

arrests mean nothing, show me the corrupt behind bars

lolmao500's picture

A train convoy carrying several batteries of missiles arrived in Mardin in southeastern Turkey. According to footage shown by the NTV network at least five vehicles in the convoy transported air defence missiles.

Turkish military helicopter crashes where troops are fighting Kurdish rebels (AP)

Assad and his family still in Damascus, Israeli military says (Reuters)

Police Shooting in Anaheim Leads to Violent Clash

LongSoupLine's picture

I remain, unsurprisingly, skeptical.