A few convictions of traders. Several walk.

Photo courtesy of Adobe Stock
Photo courtesy of Adobe Stock

An ongoing challenge for law enforcement in pursuing charges against bankers is actually getting convictions at trial. Even manipulating Libor is a tough sell to juries.

For those who wanted to see bunches of bankers in prison stripes, keep in mind there is that hurdle of persuading a jury a crime was committed. It may be difficult, but is possible to do.

7/4 – Bloomberg – Guilty Ex-Barclays Trio Ends Another Libor Chapter for London – …

More trouble for prosecutors actually getting a conviction against bankers

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Image courtesy of

Prosecutors in England failed in their efforts to convict six brokers of fixing Libor rates.

1/27 – Wall Street Journal – Six Ex-Brokers Acquitted of LIBOR Rigging in London – One key person was convicted at trial a while back and is now in prison. The six brokers just acquitted are the people he was supposedly conspiring with. Only the 6 weren’t conspiring with anyone about anything, according to the jury.

Deutsche Bank ponies up $2.5B for cooking Libor; industry wide settlements approaching $9B.

The dubious distinction of drawing the largest fine for manipulating Libor goes to Deutsche Bank. Their total tab is now $3.5B. That leaves UBS in a distant second place at $1.6B.

Check out two articles on April 22:

Deutsche Bank will pay slightly over $2.5 billion to settle up for manipulating Libor, Eurbor, and Tibor (Tokyo interbank). Several specific Directors and VPs will be fired.

A subsidiary company in Britain will plead guilty to violating American criminal laws.

Deutsche Bank in final negotiations for their Libor manipulation. If they settle at $1.5B, it would bring cumulative Libor fines to $7.6B.

Leaks to Dealbook suggest Deutsche Bank could have a settlement in May with DoJ, NY DFS, CFTC and Financial Conduct Authority in London. Amount of settlement is looking to be over $1.5B and involve a guilty plea to a criminal charge by a British sub of the bank.

Report is Deutsche Bank Nears Plea Deal Over Libor Manipulation.

Several comments in the article refer to ‘discounts’ given to the first-to-settle, which was UBS. Also comments that the last to settle pays a premium.

I’ve started tracking the Libor and Forex settlements in a spreadsheet.  There are too many banks dealing with too many regulators on too many issues to keep everything straight in my little brain.  Good infographic on settlements from WSJ here.

Minor updates on banks meeting justice

In the justice grinds slow department….

There has been much speculation of a settlement in the works for Credit Suisse for their efforts to help Americans avoid tax by secretly stashing funds in Swiss accounts. Reports are firming up that the bank will write checks of $2.5 billion to settle up. Will also take one guilty plea on a criminal charge.

The Wall Street is reporting Credit Suisse to Pay $2.5 Billion in Pact.

FDIC sues 16 big banks claiming manipulation of LIBOR

The FDIC filed a suit against a host of big banks claiming they manipulated the LIBOR rates thus harming 38 banks that were taken over by the FDIC.

Included are lots of names you’ll recognize: Bank of America, Citigroup, Credit Suisse Group,  HSBC, Barclays, JPMorgan Chase, and RBS. They also included the British Bankers’ Association which owned and managed LIBOR.

Even a few hours after the news broke, the reports I’ve read are only a couple of paragraphs long. Not much background. Here’s a few articles to read, if you wish:

The case is 14-cv-01757, Southern District of New York, in case I want to look it up later.

Charges filed against three traders in LIBOR fiasco – A new banking mess in manipulating energy prices

The U.K.’s Serious Fraud Office charged two brokers yesterday for their role in allegedly rigging Libor rates.

A third trader was charged last month. All three were arrested in England last December. This third trader was charged in the U.S. in December.

RBS settles LIBOR manipulation case with $610M fine and one guilty plea

Royal Bank of Scotland will pay $610M in fines. Their subsidiary in Japan will plead guilty to one criminal count of fraud in the U.S.

This parallels the settlement UBS reached, which I discussed earlier – UBS settles LIBOR manipulation claims for $1.5B and one guilty plea.

Summary findings from CFTC press release PR6510-13: …

UBS settles LIBOR manipulation claims for $1.5B and one guilty plea. Looks like some individual prosecutions may follow.

By agreeing to the settlement, UBS also acknowledges that several dozen traders, managers, and senior managers tried to manipulate multiple rates, including the Yen Libor, Euribor, and 4 currencies of the Libor index.  Their subsidiary in Japan will plead guilty to one felony charge in the U.S.

This from multiple media reports. See especially the Wall Street Journal article, UBS to Pay $1.5 Billion to Settle Libor Charges (behind paywall).

One obscure part of the story may turn out to be the biggest – there may be individual prosecutions in the near future

Update:  The U.S. Justice Department has unsealed formal charges against two former UBS employees.  You can read multiple news reports, but can start at the WSJ’s Two Former UBS Traders Charged in Libor Probe, which says:

The former traders, … , who lives in England, and …  a resident of Switzerland, were both charged with conspiracy, the Justice Department said. 

Mr. … was also charged with wire fraud and price fixing.

A quick summary from the WSJ:

As part of the deal, UBS acknowledged that dozens of its employees were involved in widespread efforts to manipulate the London interbank offered rate, or Libor, as well as other benchmark rates, which together serve as the basis for interest rates on hundreds of trillions of dollars of financial contracts around the world. UBS’s unit in Japan, where much of the attempted manipulation took place, pleaded guilty to one U.S. count of fraud

The British regulator, Financial Services Authority, was able to specifically identify over 2,000 attempts to manipulate the rate with knowledge and involvement of at least 45 traders and managers.

Settlement of $1.5B possible for UBS over allegedly playing games with LIBOR. And maybe some individual criminal indictments.

The Wall Street Journal reports $1.5B is the expectation for a settlement next week.  See their article A Shadow Over Banks as UBS Nears Deal.

(Behind paywall, so either grab yesterday’s paper quick or get an online subscription. Or do both.)

Criminal charges?

Euribor, cousin of Libor, may have been cooked too

This was my depressing reading at lunchtime:  Banking Industry Squirms Over European Rate Probe, in today’s Wall Street Journal.  

Oh great.  Looks like Euribor has been gamed by the big banks (pronounced eur-EYE-bore according to WSJ).

The article reports:

The European Union is expected soon to accuse multiple banks of attempted collusion in the setting of Euribor, according to people briefed on the probe.

On the other hand, you cannot say banks are underregulated

Cooking Libor. Money laundering. What are the big banks doing?

Where are the regulators?

I’ve been scratching my head about some of the things banks have been doing lately, such as manipulating Libor. Other people have long been blaming banks and other financiers as the primary cause of the 2008 financial crisis. I am definitely not in that camp, but that’s a topic for another day and a dozen posts. HSBC is setting a $1.5 billion reserve for possible fines related to money laundering, since they apparently allowed $7 billion to move from Mexico to the US in violation of US law.

In the midst of that head scratching, many people are wondering, where were the regulators? In the Libor issue at least, they were well aware of what was going on.