The U.S. Department of Justice last week ordered Rabobank to pay a $325 million criminal penalty for rigging various interbank interest rates to increase trading profits relating to the London Interbank Offered Rate and the Euro Interbank Offered Rate. The fine marks the second-largest penalty in the Criminal Division's ongoing investigation of the LIBOR trading scandal.

Rabobank must also pay a total of $740 million in criminal and regulatory penalties imposed by other agencies for similar violations, bringing the total amount to be paid by Rabobank to more than $1 billion. These penalties include $475 million to the Commodity Futures Trading Commission; $170 million to the U.K. Financial Conduct Authority; and $96 million to the Dutch Public Prosecution Service.

“Rabobank is the fourth major financial institution that has admitted its misconduct in this wide-ranging criminal investigation, and other banks should pay attention: our investigation is far from over,” Acting Assistant Attorney General Mythili Raman of the Justice Department's Criminal Division said in a statement.

According to the deferred prosecution agreement entered into with the Justice Department, Rabobank has been charged with wire fraud for its role in manipulating the benchmark interest rates LIBOR and Euro Interbank Offered Rate (EURIBOR). Specifically, the DPA stated that from as early as 2005 through at least November 2010, certain Rabobank derivatives traders requested that certain Rabobank dollar LIBOR, yen LIBOR, pound sterling LIBOR, and EURIBOR submitters submit LIBOR and EURIBOR contributions that would benefit the traders' trading positions, rather than rates that complied with the definitions of LIBOR and EURIBOR.

“Rabobank rigged multiple benchmark rates, allowing its traders to reap higher profits at the expense of their unsuspecting counterparties,” Deputy Assistant Attorney General Leslie Overton of the Justice Department's Antitrust Division said in a statement. “Not only was this conduct fraudulent, it compromised the integrity of globally-used interest rate benchmarks, undermining financial markets worldwide.”

By entering into a DPA with Rabobank, the Justice Department said it took several factors into consideration, “including that Rabobank has no history of similar misconduct and has not been the subject of any criminal enforcement actions or any significant regulatory enforcement actions by any authority in the United States, the Netherlands, or elsewhere.” The Justice Department added that Rabobank has “significantly expanded and enhanced its legal and regulatory compliance program and has taken extensive steps to remediate the misconduct.”

In addition to paying a $325 million criminal penalty to the Justice Department, Rabobank must also admit and accept responsibility for its misconduct. Rabobank has agreed to continue cooperating with the Justice Department in its ongoing investigation of the manipulation of benchmark interest rates by other financial institutions and individuals.

The prosecution of Rabobank is part of efforts underway by the Financial Fraud Enforcement Task Force, whose mission is to investigate and prosecute financial crimes. The task force involves the collaborative efforts of representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement. These agencies include the Securities and Exchange Commission and the U.K. Serious Fraud Office.