Cadwalader Clients & Friends Memo: Antitrust Division Enters Into First Deferred Prosecution Agreement

Cadwalader Clients & Friends Memo: Antitrust Division Enters Into First Deferred Prosecution Agreement

In a first for the Department of Justice ("DOJ") Antitrust Division, the Division entered into a Deferred Prosecution Agreement ("DPA") with a financial institution for its involvement in an alleged LIBOR-rate manipulation scheme. As part of the agreement, the company's Japanese subsidiary agreed to plead guilty to wire fraud in connection with the alleged LIBOR rate-rigging.

The LIBOR Investigation

The Criminal Division and Antitrust Division (collectively, the "Department") alleged that during 2006 to 2010, the company's Yen derivatives traders made efforts to move LIBOR in a direction that benefited their trading positions. According to the government, the derivative traders requested favorable LIBOR Yen-rate submissions from its LIBOR Yen-rate submitter. The DPA attached a two-count criminal information charging one count of wire fraud (18 U.S.C. § 1343) and one count of price-fixing (15 U.S.C. § 1), and required a Japanese subsidiary to plead guilty to one count of wire fraud. As part of the agreement, the financial institution and its subsidiary were required to pay a $150 million penalty. The Department entered into the DPA because of the company's cooperation in the investigation and disclosing misconduct, cooperating with the Department, and taking measures to expand and enhance its compliance program. The Department notes that while the company was not the first to step forward with helpful information, and thus did not receive leniency pursuant to the Antitrust Division's Leniency Policy, it did provide "highly valuable information that expanded and advanced the criminal investigation."

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