Six months after the Barclays epic wristslap in which there were none - zero - criminal charges against Libor manipulators, it is time to trot out the same old theatrical song and dance again, this time focusing on bailed out RBS, which the CFTC just fined a whopping sum of $325 million, modestly less than the $16 billion profit the bank made in 2007, followed by the epic subsequent collapse which saw $104 billion in bailouts to keep the bank afloat courtesy of Biritsh taxpayers. In other words: manipulate the world's most sensitive credit-related metric, and you will see either 5% of your peak profits deducted, or we will force you to get even more bailouts.
So digging into the details of this latest farce (while we still wait for the DOJ to launch a suit against Warren Buffett's Moody's) from the CFTC [9]:
- As recently as 2010 and dating back to at least mid-2006, RBS made hundreds of attempts to manipulate Yen and Swiss Franc LIBOR, and made false LIBOR submissions to benefit its derivatives and money market trading positions; RBS succeeded at times in manipulating Yen and Swiss Franc LIBOR;
- At times, RBS aided and abetted other panel banks’ attempts to manipulate those same rates;
- The misconduct involved more than a dozen RBS derivatives and money market traders, one manager, and multiple offices around the world, including London, Singapore, and Tokyo; and
- The unlawful conduct continued even after RBS traders learned that a LIBOR investigation had been commenced by the CFTC.
Said otherwise, until one of these wonderful manipulative creeps is beheaded demonstratively (either figuratively or literally) in the town square, nothing will ever change.
And now the good stuff - the quotes.
EXAMPLES OF MISCONDUCT
Yen LIBOR Manipulative Conduct Within RBS:
August 20, 2007: (Emphasis added.) (RBS Order pp. 17-18.)
Yen Trader 4: where’s young [Yen Trader 1] thinking of setting it?
Yen Trader 1: where would you like it[,] libor that is[,] same as yesterday is call
Yen Trader 4: haha, glad you clarified ! mixed feelings but mostly I’d like it all lower so the world starts to make a little more sense.
Senior Yen Trader: the whole HF [hedge fund] world will be kissing you instead of calling me if libor move lower
Yen Trader 1: ok, i will move the curve down[,] 1bp[,] maybe more[,] if I can
Senior Yen Trader: maybe after tomorrow fixing hehehe
Yen Trader 1: fine[,] will go with same as yesterday then
Senior Yen Trader: cool
Yen Trader 1: maybe a touch higher tomorrow
August 20, 2007: (Emphasis added.) (Reflecting awareness of UBS conduct.) (RBS Order pp. 14-15.)
Senior Yen Trader: this libor setting is getting nutss
[…]
Bank A Trader: im puzzled as to why 3m libor fixing not coming off after the FED action
[…]
Bank B Trader: [UBS] is lending dolls through my currencies in 3 month do u see him doing the same in urs
[…]
Senior Yen Trader: yes[,] he always led usd in my mkt[,] the jpy libor is a cartel now
[…]
Senior Yen Trader: its just amazing how libor fixing can make you that much money
[…]
Senior Yen Trader: its a cartel now in london[.] they smack all the 1yr irs ..and fix it very high or low
December 5, 2007: (Emphasis added.) (RBS Order p. 15.)
Yen Trader 2: FYI libors higher again today
[…]
Yen Trader 4: ‘ucksake. keep ours low if poss. don’t understand why needs to go up in yen
Yen Trader 2: no reason dude[,] [Bank C] and [Bank D] went high yest
Yen Trader 4: send the boys round
[…]
Yen Manager: pure manipulation going on
April 2, 2008: (Emphasis added.) (RBS Order p. 10.)
Senior Yen Trader: nice libor[.] our 6m fixing move the entire fixing[.] hahahah
Yen Trader 1: the BBA called to ask me about that today
Senior Yen Trader: really?
Yen Trader 1: yes
Senior Yen Trader: they complain?
Yen Trader 1: asked to speak to me about the low 6m rate
Yen Trader 1: no[,] just to make sure i was happy with it
[…]
Senior Yen Trader: i think some banks must have complain
Yen Trader 1: he called b4 any of the other banks saw our data[,] at about 11.15[,] to check it was ok
Senior Yen Trader: oh then its fine
Yen Trader 1: before publishing
Senior Yen Trader: i am sure some HF [hedge fund] will complain tomorrow ..
Yen Trader 1: tough
Senior Yen Trader: we will say we lower every tenor ..1m 3m 6m ..we feel rbs name has very good credit ..no problem getting money in
Senior Yen Trader: good way to boost share price!
Senior Yen Trader: our 3m libor is at top end …6m at bottom end …just the ideal level!
September 3, 2009: (RBS Order p. 9.)
Senior Yen Trader: [Yen Trader 6], can you ask [Primary Submitter] to drop 3m Libor by 1 bps? hold 6m libor unchange [sic] thanks
Yen Trader 6: Yes[,] going over to his desk now[,] yup, 6s going unch, 3s will drop by 1
Senior Yen Trader: domo
September 14 and 15, 2009: (Emphasis added.) (Primary Submitter agrees to switch direction of submissions over two consecutive days.) (RBS Order p. 16.)
September 14:
Yen Trader 1: high 3s and 6s please
Primary Submitter: ok
September 15:
Yen Trader 1: can we lower our fixings today please [Primary Submitter]
Primary Submitter: make your mind up[,] haha , yes no probs
Yen Trader 1: im like a whores drawers
Yen Manager’s Participation
August 22, 2007: (RBS Order pp. 10-11, 18.)
Yen Manager: Hi Mate, where are u calling the 6m and 3s Libor today ?
Yen Trader 1: i put in 1.05 and 1.15
Yen Manager: ok cool...is that close to consensus ?
Yen Trader 1: i think my 3s are too high[,] 6s will prob be 1.13 too[,] but i wanted high fixes today
Yen Manager: ok cool[,] its all a random variable for us at this stage it is just we have some small fixings
Yen Trader 1: well let me know if you have any preferencves [sic][,] each day
Yen Manager: thx will do
December 3, 2007: (RBS Order p. 11.)
Yen Manager: for choice we want lower libors...let the [Money Market] guys know pls
Yen Trader 2: sure i am setting today as [Yen Trader 1] and cash guy off [Primary Submitter]
Yen Manager: great set it nice and low
Yen Trader 2: 1.02 in 6m or lower
Yen Manager: yeh lower
Yen Trader 2: 1.01 then cant really go much lower than that
Yen Manager: ok
Yen Trader 2: u care for 1m and 3m too[?] looks to me like fra map pretty flat
Yen Manager: lower generally dude
Yen Trader 2: cool
Yen Manager: within the acceptable bounds
Yen LIBOR Collusion With UBS:
February 15, 2007: (RBS Order p. 20.)
Yen Trader 2: how many people can u get to put this 1m libor low
UBS Yen Trader: well us[,] [Bank E,] and a few others i think
February 21, 2007: (RBS Order p. 20.)
Yen Trader 2: what ur guys calling 3s libor[?] we need to get some low fixes
UBS Yen Trader: .64[,] yes will ask for low low high[,] 1m 3m 6m
Yen Trader 2: our guy agrees but reckons it will be 67[,] not good
UBS Yen Trader: no way!
[…]
UBS Yen Trader: […] make sure your boys set low 1m and 3m
Yen Trader 2: will try though [Yen Trader 1/backup Yen LIBOR submitter] wants high 3s and 6s
UBS Yen Trader: we want high 6’s too? don’t let [Yen Trader 1] keep 3m high to help [Senior Yen Trader][,] i hate that guy
May 7, 2008: (RBS Order p. 21.)
UBS Yen Trader: Hi [Sterling Cash Trader] if this is you can you pls ask for a low 6m in jpy for the next few days[.] Hope you are ok, was good seeing you last week[.] Cheers [UBS Yen Trader]
Sterling Cash Trader: Hi mate, I mentioned it to our guy on Friday and he seemed to have no problem with it, so fingers crossed.
Swiss Franc LIBOR Manipulative Conduct Within RBS:
December 4, 2008: (Emphasis added.) (RBS Order p. 25-26.)
Swiss Franc Trader: can u put 6m swiss libor in low pls?
Primary Submitter: NO
Swiss Franc Trader: should have pushed the door harder
Primary Submitter: Whats it worth
Swiss Franc Trader: ive got some sushi rolls from yesterday?
[…]
Primary Submitter: ok low 6m , just for u
Swiss Franc Trader: wooooooohooooooo[,] 0.01%? thatd be awesome
Primary Submitter: 1.33
Swiss Franc Trader: perfect[.] u r a nice man
January 30, 2009: (RBS Order p. 26-27.)
Swiss Franc Trader: high 3m libors pls!!!!!!
Primary Submitter: 0.50??
Primary Submitter: 0.51
Primary Submitter: 0.52
Primary Submitter: 0.53
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: 0.54
Swiss Franc Trader: and low 6m
Primary Submitter: Ok i get ya
Swiss Franc Trader: 0.65
Swiss Franc Trader: 0.65
Swiss Franc Trader: 0.65
Swiss Franc Trader: 0.65
Primary Submitter: ok
Primary Submitter: libors as requested
Swiss Franc Trader: you a top dog
May 5, 2009: (RBS Order p. 27.)
Swiss Franc Trader: can we get high 3m, low 6m pls!
Primary Submitter: maybe
Swiss Franc Trader: PPPPLLLLLEEEEEAAAAASSSSEEEEEE
Primary Submitter: ok 41 52
Swiss Franc Trader: perfect perfect
May 14, 2009: (Emphasis added.) (RBS Order p. 28-29.)
Swiss Franc Trader: [Primary Submitter] pls can we get super high 3m[,] super low 6m
Swiss Franc Trader: PRETTY PLEASE!
Primary Submitter: 41 & 51
Swiss Franc Trader: if u did that[,] i would lvoe [sic] u forever
Primary Submitter: 41 & 55 then …
Swiss Franc Trader: if u did that i would come over there and make love to you[,] your choice
Primary Submitter: 41+51 it is
Swiss Franc Trader: thouht [sic] so
Primary Submitter: so shallow
RBS Collusion With Interdealer Brokers:
June 26, 2009: (Emphasis added.) (RBS Order p. 24.)
Interdealer Broker B: Hello mate, [Yen Trader 1]? You all set?
Yen Trader 1: Yeah.
Interdealer Broker B: Right listen we’ve had a couple of words with them, you want them lower right?
Yen Trader 1: Yeah.
Interdealer Broker B: Alright okay, alright listen, we’ve had a couple words with them. You want them lower, right?
Yen Trader 1: Yeah.
Interdealer Broker B: Alright okay, alright, no we’re okay just confirming it. We’ve, so far we’ve spoke to [Bank F]. We’ve spoke to a couple of people so we’ll see where they come in alright. We’ve spoke, basically one second, basically we spoke to [Bank F], [Bank G], [Bank H], who else did I speak to? [Bank I]. There’s a couple of other people that the boys have spoke to but as a team we’ve basically said we want a bit lower so we’ll see where they come in alright?
Yen Trader 1: Cheers.
Interdealer Broker B: Cheers no worries mate.
March 3, 2010: (Emphasis added.) (Former Sterling Cash Trader now employed by Interdealer Broker A.) (RBS Order p. 22.)
Former Sterling Cash Trader: can i pick ur brain?
Primary Submitter: yeah
Former Sterling Cash Trader: u see 3m jpy libor going anywhere btween now and imm?
Primary Submitter: looks fairly static to be honest , poss more pressure on upside , but not alot
Former Sterling Cash Trader: oh[,] we hve a mutual friend who’d love to see it go down, no chance at all?
Primary Submitter: haha [former UBS Yen Trader at Bank C] by chance
Former Sterling Cash Trader: shhh
Primary Submitter: hehehe , mine should remain flat , always suits me if anything to go lower as i rcve funds
Former Sterling Cash Trader: gotcha, thanks, and, if u cud see ur way to a small drop there might be a steak in it for ya, haha
Primary Submitter: noted ;-)
Former Sterling Cash Trader: 8-)
RBS Yen Trader Engaged In Wash Trades to Compensate Brokers
September 19, 2008: (RBS Order p. 23.)
Interdealer Broker B: can you do me a favour … you’re not going to get paid any bro for this and we’ll send you lunch around for the whole desk. Can you flat…can you switch two years semi at 5 3/4 , 100 yards [meaning 100 billion] … between UBS. Just get … take it from UBS, give it back to UBS. He wants to pay some bro. We won’t bro you…
Yen Trader 1: Yeah, yeah
[…]
Interdealer Broker B: Yeah. Yeah. 100 yards … actually can you make it 150 and I’ll send lunch around for everybody?
Yen Trader 1: Yeah.
Interdealer Broker B: Thanks very much. Cheers. Cheers, mate and you choose lunch.
Continuing Conduct after Commencement of Investigation:
November 22, 2010: (Emphasis added.) (RBS Order p. 30.)
Senior Yen Trader: hey ...you think we be able to convince [Primary Submitter] to change the libor today?
Yen Trader 1: i can try
Senior Yen Trader: need to drop 3mth Libor and hike 6m Libor he dropped 6m by 2 bps last Friday
Yen Trader 1: at the moment the FED are all over us about libors
Senior Yen Trader: thats for the USD?
Yen Trader 1: ye[]s
Senior Yen Trader: dun think anyone cares the JPY libor
Yen Trader 1: not yet[,] i will walk over ot [sic] them
November 24, 2010: (Reflecting feigned refusal over Bloomberg Chat, immediately followed by agreement in telephone conversation.) (RBS Order pp. 30-31.)
Bloomberg Chat:
Senior Yen Trader: was wondering if it suits you guys on hiking up 1bp on the 6mth Libor in JPY ... it will help our position tremendously
Primary Submitter: how you doing with all the volatilities these days? ... to be honest happy with levels we see at the moment
Senior Yen Trader: ok no prob ... wouldn’t want to cause any problem ... thanks mate
Telephone Conversation:
Senior Yen Trader: Hello?
Primary Submitter: Morning, [Senior Yen Trader]? Hi, [Primary Submitter].
Senior Yen Trader: Yeah, how are you?
Primary Submitter: I’m pretty good sir. Very Good. We’re just not, we’re not allowed to have those conversations on [instant messages].
Senior Yen Trader: Oh, sorry about that. I didn’t know.
Primary Submitter: (laughter)
Senior Yen Trader: (laughter) Oh because of the, the BBA thing?
Primary Submitter: Yes, exactly.
Senior Yen Trader: Ah, ok ok.
Primary Submitter: So yeah, leave it with me, and uh, it won’t be a problem.
Senior Yen Trader: Ok, great.