Barclays Bank PLC and Barclays Capital Inc. will pay $100 million as part of a 44-state settlement “for fraudulent and anticompetitive conduct” involving the manipulation of U.S. Dollar, LIBOR (the London Interbank Offered Rate), and other benchmark interest rates.
During the relevant time period, a panel of 16 banks made LIBOR submissions that were supposed to reflect borrowing rates in the interbank market; a daily LIBOR rate was calculated by averaging the middle eight submissions.
During the financial crisis, from 2007-2009, Barclays managers told LIBOR submitters to lower their LIBOR settings to avoid the appearance that it was in financial difficulty and needed to pay more than some of its competitors to borrow money. The LIBOR submitters complied with the instructions. Also, from 2005 to 2007 and continuing at least into 2009, Barclays’ traders occasionally asked Barclays’ LIBOR submitters to change LIBOR settings in order to benefit their positions.
“Government entities and not-for-profit organizations in New York and throughout the U.S., among others, were defrauded of millions of dollars when they entered into swaps and other financial contracts with Barclays without knowing that it and other banks on the USD-LIBOR-setting panel were manipulating LIBOR and, at times, colluding with other banks,” says a statement from New York Attorney General Eric Schneiderman.
States with LIBOR-linked swaps and other investment contracts with Barclays will be notified if they are eligible to receive restitution from a settlement fund of $93.35 million. ,The balance of the settlement fund will be used to pay expenses of the investigation and for other uses consistent with state law.
Barclays is the first of several USD-LIBOR-setting panel banks under investigation by the State Attorneys General to resolve the claims against it, and, according to Schneiderman, has cooperated with the investigation.
The investigation into the conduct of several other USD LIBOR-setting panel banks is ongoing.
States joining New York in the Barclays settlement include: Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin , and Wyoming.