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Barclays fined £290m over rate-setting misconduct

The FSA has today fined Barclays Bank £59.5m for misconduct relating to the London Interbank Offered Rate and the Euro Interbank Offered Rate. This is the largest fine ever imposed by the FSA.

Barclays has also been fined £128m by the US Commodity Futures Trading Commission and £102.6m by the US Department of Justice, bringing the total fine levied against Barclays to £290.1m.

The regulator says Barclays’ breaches involved a significant number of employees and occurred over a number of years.

Barclays’ misconduct included making submissions which formed part of the Libor and Euribor setting process that took into account requests from Barclays’ interest rate derivatives traders.  The FSA says Barclays’ traders were motivated by profit and sought to benefit the bank’s trading positions.

The bank also sought to influence the Euribor submissions of other banks contributing to the rate setting process, and reduced its Libor submissions during the financial crisis as a result of senior management’s concerns over negative media comment.

Barclays also failed to have adequate systems and controls in place relating to its Libor and Euribor submissions processes until June 2010 and failed to review its systems and controls at a number of appropriate points.

Barclays also failed to deal with issues relating to its Libor submissions when these were escalated to Barclays’ investment banking compliance function in 2007 and 2008. 

FSA acting director of enforcement and financial crime Tracey McDermott says: “Making submissions to try to benefit trading positions is wholly unacceptable.  This was possible because Barclays failed to ensure it had proper controls in place.  Barclays’ behaviour threatened the integrity of the rates with the risk of serious harm to other market participants.”

The British Bankers’ Association is carrying out a review of the way Libor is set and will publish its findings shortly.

Barclays chief executive Bob Diamond says he, finance director Chris Lucas, chief operating officer Jerry Del Missier and Rich Ricci, head of the lender’s investment banking unit, will forgo their annual bonuses this year in light of the fine.

He says: “Nothing is more important to me than having a strong culture at Barclays. I am sorry that some people acted in a manner not consistent with our culture and values. To reflect our collective responsibility as leaders, Chris Lucas, Jerry del Missier, Rich Ricci and I have voluntarily agreed with the Board to forgo any consideration for an annual bonus this year.”

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Comments

There are 22 comments at the moment, we would love to hear your opinion too.

  1. I hope all of that money goes into running the regulatory system and the FSCS to reduce our fees.

  2. Where exactly will this money go I wonder. Maybe I will get a letter stating that my FSA fees have been reduced? I guess this will happen at the same time the England football team will win another trophy.

  3. Look forward to more of these institution penalties as the number of IFA`s drops dramatically along with their contributions to the FSA`s costs.

  4. In all seriousness. Where does this money go. If it takes 6 or 700 million each year to run the FSA surely we IFA’s should see some benefit of this?

  5. “…bringing the total fine levied against the FSA to £290.1m.”
    Er, I don’t think the fine is levied against the FSA is it??? We’re in trouble if it is!

  6. The fines are used to reduce fees the following year. I seem to recall that they are used to reduce the fees for the fee block that the fined company/person pays into i.e. bank fees reduce bank levys – sdaly they don’t reduce ours, which one could argue is a scandal in itself!

  7. What do you think would happen to any of us that let our companies act like this. I think we would lose more than our bonuses. We would be kicked out of the industry yet Bob Diamond gets a slap on the wrists. Is anyone at Barclays going to lose their career? I very much doubt it!!! FSA, you disgust me.

  8. Surely, when there are a number of people consciously acting together to manipulate a market, this is fraud. Why are criminal proceedings not being brought? For men as wealthy as Bob Diamond, foregoing a bonus is small beer. 12 months in Wormwood Scrubs might be a better disincentive for the crooks involved.

  9. Reduce fees or levies !!! not a hope in hell

    This will be a nice little war chest for when it comes to bonuses next year, it will be a nice day sitting around the boardroon to divvy this out amongst themselves sipping the earl grey and nibbling on the hobnobs.

    They might even have enough left over to put a little something in the christmas cards for Sants, cole, smith, etcetc etc etc

  10. Barclays ruined my credit rating forever by withdrawing my overdraft and has good has finished me, I never done anything wrong

  11. Whether this constitutes fraud or not, the fine confirms that a de facto breach of the FSA’s Principles for Business has occured and the quantum of the fine reflects the seriousness of the breach.

    Since various parties have acted in concert, this is clearly more than poor internal controls.

    So, why is inforcement proceedings not being taken against the individuals and management concerned?

    Call me a cynic, but the FSA truly appear to have one set of rules for IFAs and another for the big banks.

  12. Steve,
    So let me get this right, Barclays are fined for misconduct, then the FSA use the fine to reduce Barclays fees next year, sounds like typical FSA logic to me.

  13. Amused bystander 27th June 2012 at 3:30 pm

    I’m pretty certain that any fines etc that the FSA levies against naughty firms go towards reducing fees across the board for all regulated firms not just in the block from which the penalties are received. However ever penny received from fines penalties goes towards to cost of the FSA. So this £60m pays more than 10% of the cost of the FSA

  14. Fraud? How is it anything else? They benefit from manipulation and a few lose their bonuses. So when do they become unfit for their role and when will the police step in?

    Oh, that right they are a bank. That’s the get out jail of free card. No, to be precise it’s the “You can never put me in jail card”

  15. Julian Stevens 27th June 2012 at 4:37 pm

    What’s missing here (as usual when it comes to the banks) is any mention of any INDIVIDUALS being named, shamed, fined and banned.

    Or was this, as Hector Sants likes to describe such matters, just another of those collective institutional failings for which nobody who can be named is actually responsible ~ it just sort of……….happened.

    And on what grounds are Messrs Diamond, Lucas, Del Missier and Ricci foregoing their bonuses if they’re entirely innocent and had no idea what was going on, let alone sanctioned it?

    Phew ~ what’s that funny smell?

  16. How are these things being allowed to happen and why the noise from the likes of BBA after the event?!

    What this demonstrates is that the people in charge of such matters at the bank are not to be trusted with office and therefore should indeed be censured and removed. Will that happen? Well I suspect not..It’s money that makes the world go around!!

  17. There is more than one way to fight a war.
    1. You can send in troops with guns and tanks
    2. You can “Nuke em”
    3. You can sow GM modified crops which will cause natural crops to be overtaken and then the GM crops fail to germinate. Wipes out a population quite effectively.
    4. You can drop anthrax in the dairy fields which then gets in to the milk supply and then affects those who drink it.
    5. Or what appears on the surface to be less painless, you can carryout economic warfare by distorting markets and providing inaccurate information.
    If I was a senior Barclays member of staff, I would be moving to France TODAY as this appears to have affected the US as much as the UK and hence could be considered financial terrorism as much as it was with the NatWest 3. How high up in Barclays did the knowledge of these actions go? I have read it said that “The FSA said Barclays’ breaches of the FSA’s requirements encompassed a number of issues, involved a SIGNIFICANT number of employees and occurred over a NUMBER of years.”
    The FSA bangs on about Ethics and has even made it a mandatory part of the level 4 for advisers and yet senior managament don’t even have to have passed a level 4, and some appear to have no ethics. We are required not only to report suspected drug trafficking, money laudnering, but also the PROCEEDS of CRIME and market manipulation to this exten is a CRIME. As such anyone who has knowinglety not reported it to their MLRO is potentially liable to prison as is the MLRO if he ignored it as is any director this was then referred to who ignored it and so on up the line.
    If this was drug trafficking, we’d be saying that punishing a dealer wh is also a user is NOT the problem, it is the manufacturers furtehr up the food chain who don’t use themselves, but live off other people’s misery. Take this exampel across to banking and the people at the bottom getting the bonuses and falsifying info are the addict dealers, but it is those furtehr up the food chain who know this is happening and distance themselves whilst still keeping all their historical bonuses (a proceed of finanmcial crime either unknowingley or knowingley)

  18. dream on guys if you think any of that will filter down to us IFAs in the form of reduced fees. I have just received another invoice from the FSA/FSCS which is up almost exactly 50% on last year. When will these increases stop? What i found insulting was the note on the invoice stating that part of my fee is a contribution towards plugging the deficit in the FSA final salary pension scheme. Legalised theft. The whole thing is leaving me disillusioned.

  19. So it appears Barclays, with the assistance of others, has rigged not just the prices of a few individual stocks and bonds but the prices at which most large scale lending took place.
    I believe Bob Diamond is being disingenuous when he suggests that some staff have not acted in a manner consistent with Barclays culture. The staff most surely did act within the Barclays culture and that is the problem here.
    Look at the number of people who have been disciplined in other regulated businesses, personally fined and barred from working in financial services for what in this context are very minor transgressions. Not saying that these other persons should not have been disciplined but market abuse on this scale really requires that most of the senior management should be banned from financial services for life with an number facing criminal prosecution for a list of transgressions as long as your arm.

  20. Why aren’t Diamond et al in the dock for this crime ?
    Is it that they are prosperous and connected enough to avoid any charges being brought ?

  21. This publication has from time to time run articles on people who have manipulated the market for gain, been fined heavily, banned by the FSA and occasionally gone to prison. But then they weren’t working for a bank!

  22. It never ceases to amaze me how people in charge of large organisations justify their salary as a result of their responsibilities.

    And yet when those below them do wrong accept no responsibility whatsoever.

    As per the comments above if an ifa or stockbroker carried out this kind of fraud they would be drummed out of the industry.

    Obviously the FSA isnt going to do anything as where will they get a job when they leave the FSA.

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