Tuesday, October 29, 2013

Rabobank Settles Libor Investigation for More than $1 Billion

Rabobank, a Dutch lender, admitted to criminal violations of law by employees and agreed to pay more than $1billion in criminal fines and civil penalties to settle investigations by the United States, the United Kingdom, and Dutch authorities.
 
The investigation involved derivative swap traders at Rabobank.  The swap traders requested that other Rabobank employees make submissions used in calculating the London interbank offered rate, Libor, and the Euro interbank offered rate, Euribor, that would benefit the positions of the swap traders.  The improper actions took place between 2005 and 2011.  Moreover, the investigation disclosed that a conflict of interest existed at Rabobank as traders with financial positions tied to the Libor and Euribor rates served in positions to submit rates used in calculating these benchmark rates.
 
Pursuant to the settlement, Rabobank will pay the United States Department of Justice a $325 million fine and a $475 million civil monetary penalty to the U.S. Commodity Futures Trading Commission.  Further, it will pay the British Financial Conduct Authority $170 million and $96 million to Dutch authorities.  The arrangement was part of a deferred prosecution agreement, in which Rabobank will not be charged criminally if it continues to cooperate with law enforcement and refrains from further illegal activity. 
 
The investigation of individuals Rabobank is continuing as 30 employees were involved in the illegality.  There may be criminal cases brought against some of these employees.  The bank has recovered approximately $5.8 million in bonuses from those involved.  Moreover, Rabobank spokespersons said that the bank cooperated fully with authorities and has instituted better systems and controls to prevent any future occurrences.
 

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