Barclays to pay $100,000,000 for manipulating interest rates

Barclays to pay $100,000,000 for manipulating interest rates

By / State News / Monday, 08 August 2016 04:00

RALEIGH, N.C. : August 8th, 2016 - Multinational bank and financial services company Barclays has entered into a settlement agreement to pay $100 million for engaging in anticompetitive conduct and manipulating interest rates, Attorney General Roy Cooper announced August 8th. “Taxpayers, government agencies and nonprofits suffer when banks rig the system,” Cooper said. “We took action to win back money and send a clear signal that we won’t tolerate these bad business practices.”

Settlement worth $93.3 million nationally
The settlement resolves allegations that Barclays manipulated LIBOR through two different kinds of fraudulent and anticompetitive business practices. Government and nonprofit entities with LIBOR-linked swaps and other investment contracts with Barclays will be notified if they are eligible to receive restitution from a fund of $93.3 million. An additional payment of $6.3 million will be distributed to participating attorneys general to cover the cost of future antitrust law enforcement. The remaining $350,000 will pay administration costs for the settlement fund.

LIBOR, the London Interbank Offered Rate, is a benchmark interest rate used by several major banks to determine how much they pay to borrow money from one another, which affects trillions of dollars in currency, global markets, investors, and consumers.

Investigation uncovers fraud by Barclays
An investigation conducted by Cooper and 43 additional state attorneys general revealed that during the 2008 financial crisis, Barclays' managers frequently hid the company’s financial difficulties by telling LIBOR submitters to lower their LIBOR settings. As a result, Barclays avoided paying higher interest rates than some of its peers to borrow money. Barclays’ traders also repeatedly encouraged their LIBOR submitters to change LIBOR settings to benefit their trading positions, and in many cases illegally colluded with traders from other banks to do so. Government and nonprofit entities were defrauded out of millions when they entered into swaps and other investments with Barclays without knowing that Barclays and other banks on the U.S. dollar LIBOR-setting panel were colluding to rig interest rates. As a result, local governments, retirement systems, nonprofits received artificially low rates of return on their investments or paid higher rates than they should have.

Barclays is the first of several banks under investigation by state attorneys general related to LIBOR. An investigation into the conduct of several other USD LIBOR-setting panel banks is ongoing.
“Investors deserve a level playing field and fair competition when they do business,” Cooper said. “My office will continue this investigation to make sure that others who broke the law are held accountable.”
Source: NC Department of Justice.


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