WASHINGTON, D.C. — (Mealey’s) Dutch bank Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) has agreed to pay more than $1 billion in civil and criminal penalties to settle allegations that it manipulated the London InterBank Offered Rate (Libor), the U.S. Department of Justice (DOJ) announced Oct. 29.
According to a DOJ press release, Rabobank has entered into an agreement with the DOJ to pay a $325 million penalty to resolve violations arising from Rabobank’s submissions for the Libor and the Euro Interbank Offered Rate (Euribor), which are leading benchmark interest rates around the world.
“Together with approximately $740 million in criminal and regulatory penalties imposed by other agencies in actions arising out of the same conduct—$475 million by the Commodity Futures Trading Commission (CFTC) action, $170 million by the U.K. Financial Conduct Authority (FCA) action and approximately $96 million by the Openbaar Ministerie (the Dutch Public Prosecution Service)—the Justice Department’s $325 million criminal penalty brings the total amount to be paid by Rabobank to more than $1 billion,” the DOJ said.
“Rabobank rigged multiple benchmark rates, allowing its traders to reap higher profits at the expense of their unsuspecting counterparties,” Deputy Assistant Attorney General Leslie C. Overton of the DOJ’s Antitrust Division said in the press release. “Not only was this conduct fraudulent, it compromised the integrity of globally-used interest rate benchmarks—undermining financial markets worldwide.”
Deferred Prosecution Agreement
The DOJ said a criminal information will be filed in the U.S. District Court for the District of Connecticut that charges Rabobank as part of a deferred prosecution agreement (DPA). The information charges Rabobank with wire fraud, and the DPA requires the bank to admit and accept responsibility for its misconduct, the DOJ said. Rabobank has agreed to continue cooperating with the DOJ in its ongoing investigation of the manipulation of benchmark interest rates by other financial institutions and individuals, the DOJ said.
“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 DOJ’s Criminal Division said in the press release.
Rabobank said in a press release that 30 of its employees “were in some way involved in inappropriate conduct.” The bank said it “will remain financially stable despite the payment of these significant settlement amounts.” Rabobank also announced that its CEO, Piet Moerland, has resigned.
“During the period in which the inappropriate conduct occurred, Rabobank did not sufficiently appreciate the risks associated with the Libor and Euribor submission processes, and we regret this,” Moerland said in the press release. “While that was an industry-wide shortcoming, it in no way excuses the inappropriate conduct of a number of Rabobank employees. Rabobank has now implemented robust systems and controls relating to its interest rate benchmark submission processes.”
Rabobank said “[t]hose employees who were involved in serious misconduct have had their contracts of employment brought to an end. Other disciplinary action has included, in different combinations, formal warnings, financial sanctions, and the removal of managerial responsibilities. Bonuses have been partly or entirely reclaimed for the period 2009-2012, in the total amount of EUR 4.2 million.”
The DOJ press release can be found at www.fbi.gov/washingtondc/press-releases/2013/rabobank-admits-wrongdoing-in-libor-investigation-agrees-to-pay-325-million-criminal-penalty.
The Rabobank press release can be found at www.rabobank.com/en/press/search/2013/libor.html?pt=PressReleasepage.
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