Shocking Details Of Barclays Epic Lie-bor Fraud: "Duuuude…Whats Up With Ur Guys 34.5 3m Fix…Tell Him To Get It Up!"

Tyler Durden's picture

We knew something was very wrong back in January 2009. We knew the rabbit hole went deep. We had no idea just how deep.... It goes very, very, very deep.

From the FSA' breakdown of Barclays traders caught in the act of manipulation:

On Friday, 10 March 2006, two US dollar Derivatives Traders made email requests for a low three month US dollar LIBOR submission for the coming Monday:

 

i. Trader C stated “We have an unbelievably large set on Monday (the IMM). We need a really low 3m fix, it could potentially cost a fortune. Would really appreciate any help”;

 

ii. Trader B explained “I really need a very very low 3m fixing on Monday – preferably we get kicked out. We have about 80 yards [billion] fixing for the desk and each 0.1 [one basis point] lower in the fix is a huge help for us. So 4.90 or lower would be fantastic”. Trader B also indicated his preference that Barclays would be kicked out of the average calculation; and

 

iii. On Monday, 13 March 2006, the following email exchange took place:

 

Trader C: “The big day [has] arrived… My NYK are screaming at me about an unchanged 3m libor. As always, any help wd be greatly appreciated. What do you think you’ll go for 3m?”

 

Submitter: “I am going 90 altho 91 is what I should be posting”.

 

Trader C: “[…] when I retire and write a book about this business your name will be written in golden letters […]”.

 

Submitter: “I would prefer this [to] not be in any book!”

More:

The number of requests and the period of time over which they were made indicate that the Derivatives Traders made requests on a routine basis. Specific emails also indicate the requests were made regularly. For example, the following email exchange took place on 27 May 2005:
Submitter:“Hi All, Just as an FYI, I will be in noon’ish on Monday […]”.
Trader B: “Noonish? Whos going to put my low fixings in? hehehe
Submitter: “[…] [X or Y] will be here if you have any requests for the fixings”.

More:

In response to a request from Trader C for a high one month and low three month US dollar LIBOR submission on 16 March 2006, a Submitter responded: “For you…anything. I am going to go 78 and 92.5. It is difficult to go lower than that in threes, looking at where cash is trading. In fact, if you did not want a low one I would have gone 93 at least”.

More:

Trader C requested low one month and three month US dollar LIBOR submissions at 10:52 am on 7 April 2006 (shortly before the submissions were due to be made); “If it’s not too late low 1m and 3m would be nice, but please feel free to say “no”... Coffees will be coming your way either way, just to say thank you for your help in the past few weeks”. A Submitter responded “Done…for you big boy”.

More:

On 6 August 2007, a Submitter even offered to submit a US dollar rate higher than that requested:
Trader F: “Pls set 3m libor as high as possible today
Submitter: “Sure 5.37 okay?”
Trader F: “5.36 is fine”

More:

On Thursday 14 December 2006, Trader F emailed a Submitter, requesting a low three month US dollar LIBOR submission for the following Monday, 18 December 2006; “For Monday we are very long 3m cash here in NY and would like the setting to be set as low as possible…thanks”. The Submitter instructed another Submitter to accommodate the request; “You heard the man” and confirmed to Trader F “[X] will take notice of what you say about a low 3 month”.

 

Two seconds later, that Submitter sent himself an electronic calendar reminder to make a low three month submission at 11 am on Monday 18 December 2006: “USD 3mth LIBOR DOWN”.

It just gets better:

For example, on 26 October 2006, an external trader made a request for a lower three month US dollar LIBOR submission. The external trader stated in an email to Trader G at Barclays “If it comes in unchanged I’m a dead man”. Trader G responded that he would “have a chat”. Barclays’ submission on that day for three month US dollar LIBOR was half a basis point lower than the day before, rather than being unchanged. The external trader thanked Trader G for Barclays’ LIBOR submission later that day: “Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger"


And better:

For example, on 6 September 2006, an external trader at another bank (Panel Bank 1) contributing EURIBOR submissions sent an instant message to Trader E at Barclays requesting a low one month submission: “I seriously need your help tomorrow on the 1mth fix”. The next day, Trader E passed on the request to Barclays’ Submitters, blind copying in the external trader.

And better:

On 28 February 2007, Trader B made a request to an external trader in relation to three month US dollar LIBOR “duuuude… whats up with ur guys 34.5 3m fix…tell him to get it up!!” The external trader responded “ill talk to him right away”.

And other banks:

Barclays’ Submitters also received 11 requests for sterling LIBOR submissions from an external trader at another bank (who had previously worked at Barclays). These requests were not taken into account.

And truly stunning:

Trader E communicated with traders at Panel Banks 1, 2 and 6 in advance of the IMM date. For example on 12 February 2007, Trader E stated in an instant message with a trader at Panel Bank 6:
“if you know how to keep a secret I’ll bring you in on it […]
we’re going to push the cash downwards on the imm day […]
if you breathe a word of this I’m not telling you anything else […]
I know my treasury’s firepower…which will push the cash downwards […]
please keep it to yourself otherwise it won’t work”.

And, in the end, the punchline:

Various instant messages exchanged after the final benchmark rates were published on 19 March 2007 indicated that the traders involved considered that their strategy had been successful. Trader E commented to the external trader at Panel Bank 6 “this is the way you pull off deals like this chicken, don’t talk about it too much, 2 months of preparation […] the trick is you must not do this alone […] this is between you and me but really don’t tell ANYBODY”.

Absolutely sickening. Read the full thing here.

Our advice to anyone who had an adjustable rate mortgage in the period between 2005 and today: speak to a lawyer immediately about suing the living feces out of Barclays, and all other banks who crawl out of the woodwork with purported settlements. Because due to their undisputed mark manipulation, it is absolutely safe to say that ARMs, which rely on Libor for interest rate formation, were grossly manipulated by the same idiot traders who left written evidence of their manipulation year after year. Now it is their turn to pay.

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jmcadg's picture

Fortunately MDB your opinion counts for shit.

If only you were of a high enough level to be able to email these guys, you might get to enact your dream of getting that bottle of bollie cranked up your arse whilst they laugh at your pathetic rimming efforts.

Important note, there is no smartness of any sort here dude. These guys are Moody rated AAA pricks. Sorry to state the obvious.

Now fuck off to Business Insider.

j0nx's picture

I'm trying to decide who's more evil and vile: wall street finance types or london finance types. Probably london since they have been around a lot longer and spawned the wall street types.

Rip van Wrinkle's picture

Just written my my member of parliament to get a response from the twat. He's a junior minister in the Treasury Department. Will let you now in due course what the response was.

Bartanist's picture

And yes, the "INjustice Department" and the British equivalent do not believe that theft, fraud, conspiracy and racketeering need be prosecuted.

And the government wonders why they get no respect.

potlatch's picture

Ok.  this is sad verification for me.  These guys really are the frat boys who sat in the back row in all my classes and chuckled and smirked and gamed their way through college.  I thought I was just a paranoid college prof.

Mordan I's picture

I hear a noise. It sounds like a rumble. Medusa is that you ...

Financial Cold Fusion's picture

What do you think the notional value of all instruments fixing off of 3m Libor is?  This is a perfect example of a situation that should result in the imprisonment of all individuals involved (think Federal pound me in the ass prison), and Barclay's being in a struggle for survival.  My guess, none of that will happen and is just another example of the outright crime that is routinely comitted in our capital markets.  Someday, and hopefully sooner rather than later, this will come to an end one way or another.

Bam_Man's picture

These assholes know how to cheat, steal and rig markets but they obviously know very little about champagne.

Bollinger is among the most under-whelming over-rated, over-priced champagnes of all. The fact that it is the "house champagne" at Windsor Castle apparently impresses an awful lot of people. I personally drink nothing but Mumm Cordon Rouge, but do keep a couple of bottles of Bolly on hand for less-knowledgable guests who invariably prefer the "prestige" labels.

falak pema's picture

when huge financial scam is as banal as pickpocketing at the fair. 

rosiescenario's picture

Another side of the coin.....SWAPS were based on LIBOR rates.

 

There may be a few deeppocketed folks, who do not need to join any class action, considering legal action on this.

 

Personally I think the LIBOR rate was held artificially low due to the SWAPS that had been sold by the banks.

CoolBeans's picture

Excellent story.

Sadly, I will have to practice my "surprised face".

Centurion9.41's picture

Folks, sorry to tell you this, but the reason why this stuff goes without fan fare and unpunished is two fold:

1st a vast swath of society is amoral; these people just dont care as long as they "get theirs"

2nd, society is grossly ignorant of basic math. 

Hence when they get raped and tossed some Monopoly paper, they happily wander off to MCD, or BBY, or NKE and trade it in for saturated fat, video games and sneakers.

Why should the politicians care?  Their "constituents" only care about what he can get them for free, they tell him in every poll they think he's a dirt bag, and the only ones kissing his @ss and paying him are lobbyists.

Democracies, not Republics, get everything they ask for ... and what they remain silent about.

 

Joebloinvestor's picture

More news that reinforces the opinion of why bankers are fucking evil.

A FRAUD that went on for over 6 years and NO ONE goes to jail or loses their job, but NO BONUSES (WOW BFD!).

A FRAUD that affected just about everything.

If you think Barclays is the only one involved, get real.

 

Bastiat's picture

RICO pretty much applies to the entire industry.

Idiocracy's picture

Codebreaking scumbag lingo:

"Coffees will be coming your way" = I will pay you 10s of 1,000s, cash in an envelope

"I'm opening a bottle of Bollinger" = I will pay you 100's of 1,000s, cash in an envelope

overmedicatedundersexed's picture

this reporting is why I donate to ZH..smarter for it, but depressed at the total capture of our government.

printmoremoney's picture

Thank you ZH for choosing and executing brilliant authentic reporting and commentary. 

Bastiat's picture

Front page on Drudge: Massive Cyber Raid on Banks  Nets $75M 

ptoemmes's picture

Apaprently Barclays did not use a similar (failed) defense as that document in an unrelated case by Matt Taibbi here: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-f...

In effect it it is argued that the manipulation is sort of part of the market process snd so, ought to be "ok".  Matt's entire article is worth a read (to say the least), but even when procecuted and fined - some low level slime gets the slammer but the firm(s) just pay a cost of doing business fine and motor on.

 

Disgusting...

Budd aka Sidewinder's picture

Does this mean they won't be sponsoring Phil Mickelson anymore?

BattlegroundEurope2011's picture

Somebody needs to seriously wipe that smug smile off Bob Diamonds face.

 

Preferably with a knife.

 

Joebloinvestor's picture

Sounds to me like the guys who had to find new employment after ENRON blew up, found work at Barclays.

I don't remember a trader from ENRON going to jail for their shenanigans either.

Although, wasn't this the kind of market manipulation talk that got ENRON in big trouble?

Manipulation of markets (and a prime one to boot) ought to be a criminal matter also. 

Watson's picture

Probably I miss-remember, but at the time this was happening wasn't Barclays being bailed by some Middle-Eastern sov wealth fund?

This suggests that Barclays would not have been borrowing at low rates, to put it mildly.

So if you are suing for the difference between the Barclays component of the stated Libor, and the real Barclays Libor rate (so as to get at the actual loss), isn't that rather a large number...

Watson

SmittyinLA's picture

I believe the civil statute of limitations has closed, and they could be prosecuted criminally only if this is a continuing criminal enterprise-which of course its not. 

MrBoompi's picture

If me and my competitors got caught doing this, we'd forfeit everything we stole and more, we'd get a prison sentence, and our customers would sue for treble damages.

These fuckers get a slap on the wrist and go back to work the next day to continue screwing over the world.

Jesus Christ.....

Bringin It's picture

Ah, Mr. B, I don't think they even get a slap on the wrist.

Raul Duke's picture

can someone please explain this in plain english, i dont understand all of it ?

razorthin's picture

Fix this.  And go fukk yourself.  I'm so fukking sick of all the "fixing".  Fukkers.  Yeah, they've fixed it, but good.  The whole lot of them.

unununium's picture

When Donald Rumsfeld comes on as says there is another $2T missing from the DoD, you'll know the shit is moments from hitting the fan.

Raul Duke's picture

also regardig that cyber attack, where is the money being transfered to ? nothing in all those reports and thats the most important thing, right ?

Overdrawn's picture

Question:  Does the Libor Rate affect overdrafts and credit cards?   

 

If it does we may have just found a WMD to use against them.

Overdrawn's picture

 

How Is LIBOR Used? to guide banks in setting rates for adjustable-rate loans, including interest-onlymortgages and credit card debt.  I'm so happy, happy, happy that they will have to pay it all back to customers.

 

Platinum_Investor's picture

I can't wait for some similar proof of precious metals manipulation comes out.

Everything is "Managed" "massaged" whatever you want to call it in this CASINO of a market.

ZH11's picture

 

Barclays agreed to settle at an early stage of the FSA’s investigation.  Barclays therefore qualified for a 30% (stage 1) discount under the FSA’s executive settlement procedures.  Were it not for this discount, the FSA would have imposed a financial penalty of £85 million on Barclays. 

 

What planet do these people live on?

Why should they get any discount for knowing they've been caught and acknowledging that?

Bring on the criminal cases now, far too much cosy acceptance of minor fines (in relation to the market manipulation) to try to sweep repeateded examples of a rigged system from top to bottom being exposed to the general public.