LITTLE ROCK — It also will pay nearly $93 million to British regulators.
Chief Executive Officer Robert Diamond and three lieutenants will forgo their bonuses as a result, Barclays,Commission said Wednesday in announcing the settlement. A $200 million civil penalty levied against Barclays is the largest in the commission’s history.
Barclays also agreed to pay $160 million as part of an agreement with the Jushouses.
Britain’s Barclays is one of several major banks reportedly under investigation for such violations.
The instances occurred between 2005-09, and sometimes took place daily, the U.S. Commodity Futures Trading
Barclays PLC and its subsidiaries will pay about $453 million to settle allegations that they tried to manipulate interest rates that can affect how much people pay for loans to attend college or buyBritain’s second-biggest bank by assets, said in a statement Wednesday.
The Justice Department said its related criminal investigation continues and that Barclays has agreed to cooperate.
The Commodity Futures Trading Commission said Barclays’ senior management and multiple traders tried to manipulate data used to determine the London interbank offered rate - known as Libor- and Euribor rates.
The Libor is an average rate set by banks each morning that measures how much they’re going to charge one another for loans. That rate, in turn, affects rates on many loans for consumers and businesses.
The commission said Barclays’ efforts to manipulate rates were sought to benefit itself and other banks.
“Banks must not attempt to influence LIBOR or other indices based upon concerns about their reputation or the profitability of their trading positions,” trading commission Chairman Gary Gensler said in a statement.
There was no evidence that Barclays succeeded in manipulating the published rate, a person with direct knowledge of the case said. This person spoke on condition of anonymity because the person wasn’t authorized to speak publicly.
“LIBOR and EURIBOR are critically important benchmark interest rates,” Assistant Attorney General Lanny Breuer said in a statement. “Because mortgages, student loans, financial derivatives and other financial products rely on LIBOR and EURIBOR as reference rates, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide.”
According to the Commodity Futures Trading Commission, starting in 2005 Barclays based its proposed settings for the Libor on the requests of its derivatives traders who wanted to manipulate the rate to benefit their trading positions. The traders would ask their Barclays colleagues to adjust their rate proposals up or down.
A May 2007 e-mail from a Barclays trader in New York illustrates this, the trading commission said. The e-mail said: “Pls. go for 5.36 Libor again tomorrow, very long and would be hurt by a higher setting ... thanks.”
Under the settlement, Barclays agreed to more strictly separate its traders from their colleagues involved in daily proposals for the Libor rate.
“This thing was about smoke, mirrors and sneaky backroom dealings with potentially dangerous effects on the world economy,” Commodity Futures Trading Commissioner Bart Chilton said. “There has to be a sturdy firewall” between traders and bank employees who submit proposed Libor settings, he said.
Breuer said Barclays was the first bank to cooperate extensively with the investigation. Barclays’ cooperation greatly helped the Justice Department in the investigation, he said.
Britain’s Financial Services Authority levied a fine of $92.7 million, the biggest fine ever imposed by the regulator.
“Barclays’ misconduct was serious, widespread and extended over a number of years,” Tracey McDermott, acting director of enforcement and financial crime at the British agency, said in a statement. “The integrity of benchmark reference rates ... is of fundamental importance to both U.K. and international financial markets. Firms making submissions must not usethose submissions as tools to promote their own interests.” Information for this article was contributed by Marcy Gordon of The Associated Press; by Lindsay Fortado and Silla Brush of Bloomberg News; and by Andrew Tangel of the Los Angeles Times.
Front Section, Pages 1 on 06/28/2012