DOJ, CFTC, FCA and Dutch Prosecutor Settle LIBOR Actions

Rabobank – Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. – resolved charges that it manipulated LIBOR and Euribor with four enforcement agencies, paying more than $1 billion in fines. The settlements were with the Department of Justice, The Commodity Futures Trading Commission which referred the matter to the DOJ, the U.K.’s Financial Conduct Authority and the Openbaar Ministerie or the Dutch Public Prosecution Service. This is the fifth action in the on-going inquiries into the manipulation of these interest rates.

Robobank is a Dutch multinational banking and financial services company. Its headquarters is in Utrech, Netherlands. The institution has operations in forty-four countries and territories.

LIBOR, a widely used rate, is published by the British Banker’s Association. It was calculated for 10 currencies at 15 borrowing periods of varying lengths during the period. The calculation of the rate for each period or maturity was made by obtaining submissions from a panel of banks for a particular currency. From 2005 through 2011 Rabobank was a member of the Contributor Panel for a number of currencies.

The Euro Interbank Offered Rate, or Euribor, is published by the European Banking Federation. It is the rate at which Euro interbank term deposits within the Euro zone are expected to be offered to one prime bank from another at 11:00 Brussels time. It is calculated in a fashion which is similar to LIBOR. Rabobank was also a member of the Contributor Panel for Euribor for the six year period beginning in 2005.

Rabobank began in 2005 to submit requests made at the behest of its derivatives traders for certain dollar LIBOR, yen LIBOR, pound sterling LIBOR and Euribor contributions that would benefit the trading positions of the traders. In making these submissions Robobank did not submit rates that complied with the definitions of LIBOR and Euribor.

The financial institution also entered into separate agreements with traders at other banks to make yen LIBOR and Euribor submissions that benefited the trading positions at other institutions. Again, Rabobank did not make the submissions in accord with the definitions of LIBOR and Euribor. Substantial portions of the wrongful conduct are documented in e-mails and messages quoted in the charging papers.

To resolve the inquiries with the DOJ Robobank entered into a deferred prosecution agreement. The underlying complaint charged the firm with wire fraud. The DPA is supported by an extensive statement of facts which have been admitted by Robobank. The firm also agreed to pay a criminal fine of $325,000,000. U.S. v. Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., (D.D.C. Filed Oct. 29, 2013). The DOJ determined that resolving the matter with a deferred prosecution agreement was appropriate in view of several factors including the lack of any prior wrongdoing by the institution and its significantly expanded and enhanced legal and regulatory compliance programs and extensive remediation.

The firm also resolved charges brought by the CFTC. In the Matter of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., CFTC Docket No. 1402 (Oct. 29, 2013). The bank consented, without admitting or denying the underlying allegations, to the entry of a cease and desist order based on Sections 9, 13b and 13(a)(2) of the Commodity Exchange Act. In addition, the firm agreed to implement a series of remedial undertakings designed to prevent future violations and will pay a fine of $457,000,000.

Finally, the bank resolved charges in the U.K. and the Netherlands. With the FCA the financial institution agreed to pay a £105 million fine while it will pay about $96 million to the Dutch Public Prosecution Service.

This is the fifth settlement focused on the manipulation of these interest rates. Previous settlements have been with ICAP Europe Limited, The Royal Bank of Scotland, UBS AG and Barclays PLC.