The Barclays/LIBOR scandal is only now just beginning to unravel. The question is why this was allowed to go on for so long….and why none of these monsters have been strung up, drawn and quartered.
When will there be any accountability for the bankers that engaged in fraud, conspiracy and collusion that cost real people around the world untold amounts of money.
Where is the fury?
From approximately 2005 through 2007, and occasionally thereafter through
approximately 2009, certain Barclays swaps traders requested that certain Barclays 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. Those swaps traders either proposed a particular LIBOR or EURIBOR contribution
for a particular tenor and currency, or proposed that the rate submitter contribute a rate higher,
lower, or unchanged for a particular tenor and currency. The swaps traders made these requests
via electronic messages, telephone conversations, and in-person conversations. The LIBOR and
EURIBOR submitters agreed to accommodate, and accommodated, the swaps traders’ requests
for favorable LIBOR and EURIBOR submissions on numerous occasions.
For example, on Friday, March 10, 2006, a Barclays Dollar swaps trader located in
London (” Trader-1″) sent an e-mail to a Barclays Dollar LIBOR submitter (” Submitter-1″)
stating: ” Hi mate[.] We have an unbelievably large set on Monday (the IMM). We need a really
low 3m [3-month] fix, it could potentially cost a fortune. Would really appreciate any help, I’m
being told by my NYK [counterparts in New York] that it’s extremely important. Thanks.”
Then, on Monday, March 13, 2006, at approximately 7:48 a.m., Trader-1 wrote to Submitter-1:
” The big day has[] arrived…My NYK were screaming at me about an unchanged 3m libor. As
always, any help wd [would] be greatly appreciated. What do you think you’ll go for 3m?”
Submitter-1 responded, ” I am going 90 altho[ugh] 91 is what I should be posting.” Trader-1
replied in part: ” I agree with you and totally understand. Remember, when I retire and write a
book about this business your name will be in golden letters….” Submitter-1 replied, ” I would
prefer this not be in any books!” Barclays’s 3-month Dollar LIBOR submission on March 13,
2006 was 4.90%, which was a rate unchanged from the previous trading day and was tied for the
lowest rate submitted.
26. As an example, on October 26, 2006, at approximately 7:12 a.m., Trader-1
communicated by electronic messages with Trader-6, stating, ” where do u think 3m libor will be
today?” Trader-6 replied, ” [Submitter-1] thinks 38.” Trader-1 responded in part:
” wow…unchanged!!!?!??! Short dates have rallied by 0.75bp… So I take it he’s going
unchanged? If it comes in unchanged I’m a dead man ha ha.” (ellipses in original). Trader-6
replied, ” i’ll [sic] have a chat.” Later that day, Trader-1 wrote: ” Dude I owe you big time!
Come over one day after work and I’m opening a bottle of Bollinger! Thanks for the libor.”
Trader-6 replied, ” know [sic] worries!!!” Barclays’s 3-month Dollar LIBOR submission on
October 26, 2006 was 5.375%, which was lower than Barclays’s submission on the previous
trading day.
As another example, on February 22, 2006, at approximately 9:42 a.m., Trader-1 sent
an e-mail to another Barclays Dollar LIBOR submitter (” Submitter-2″) stating, ” Hi (again)
We’re getting killed on our 3m resets, we need them to be up this week before we roll out of our
positions. Consensus for 3m today is 4.78 – 4.7825, it would be amazing if we could go for
4.79…Really appreciate ur help mate.” (ellipses in original). Submitter-2 responded, ” Happy to
help.” Barclays’s 3-month Dollar LIBOR submission on February 22, 2006 was 4.79%.
As a further example, on December 19, 2006, a swaps trader located in New York,
New York (” Trader-2″) sent an e-mail to Submitter-1 with the subject line, ” 3m Libor,” asking,
” Can you pls [please] continue to go in for 3m Libor at 5.365 or lower, we are all very long cash
here in ny.” Submitter-1 asked, ” How long for [Trader-2]?” Trader-2 replied, ” Until the
effective date goes over year end (i.e. turn drops out) if possible.” Submitter-1 replied, ” Will do
my best sir.” Trader-2 replied, ” Thx.” On December 19, 20, and 21, 2006, Barclays’s 3-month
Dollar LIBOR submissions were 5.37%, 5.37%, and 5.375%, respectively. On December 21,
2006, at approximately 12:05 p.m., Trader-2 forwarded the December 19 correspondence to
Submitter-1. At approximately 12:05 p.m., Submitter-1 forwarded Trader-2’s e-mail to
Submitter-2, stating, ” whoops.” At approximately 1:03 p.m., Submitter-1 created an electronic
calendar entry stating, ” SET 3 MONTH US$ LIBOR LOW!!!!!!” (emphasis in original) that was
scheduled to begin on December 22, 2006 at 9:00 a.m. and continue until January 1, 2007 at 9:30
a.m. On December 22, 2006 and the subsequent trading days through the end of the year,
Barclays’s 3-month Dollar LIBOR submissions were 5.36%, 5.365%, 5.35%, and 5.36%,
respectively.
As another example, on July 29, 2007, at approximately 9:45 p.m., Trader-2 sent an
e-mail to Submitter-1, with a copy to a supervising trader in New York, New York (” Trader-3″),
with the subject line, ” 3m cash,” stating, ” Pls [please] go for 5.36 libor again, very important that
the setting comes as high as possible…..thanks.” (ellipses in original). Barclays’s 3-month
Dollar LIBOR submission on July 30, 2007 was 5.36%.
As an example, on July 28, 2006, at approximately 8:26 a.m., a Barclays Euro swaps
trader (” Trader-4″) sent an e-mail to a Barclays EURIBOR submitter (” Submitter-3″) with the
subject line, ” 6m fixing,” stating, ” Plz [Please] go for LOW 6M fixing today.” (emphasis in
original). Submitter-3 replied in part, ” No probs…low it is today.” (ellipses in original).
Barclays’s 6-month EURIBOR submission on July 28, 2006 was 3.21%, which was 12 basis
points lower than its submission the previous day, and was lower than the lowest rate used in the
calculation of the EURIBOR fix.
19. As a further example, on Friday, October 13, 2006, a Barclays Euro swaps trader
(” Trader-5″) sent an electronic communication to Submitter-3 stating in part, ” I have a huge
fixing on monday…something like 30bn 1m fixing…and i would like it to be very very very
high….can you do something to help? i know a big clearer will be ag[a]inst us…and dont [sic]
want to loose money [sic] on that one.” (ellipses in original). Submitter-3 replied that s/he had
been moved within Barclays, but had forwarded the request to another EURIBOR submitter
(” Submitter-4″) who was covering for Submitter-3. Submitter-3 forwarded the request to
Submitter-4 and added, ” We always try and do our best to help out…” (ellipses in original).
Barclays’s 1-month EURIBOR submission on Monday, October 16, 2006, was 3.36%, which
was 1 basis point higher than its submission the previous day and was equal to the secondhighest rate submitted by EURIBOR Contributor Panel banks. Within the Contributor Panel,
Barclays moved from being tied for the 6th highest rank on the previous trading day to being tied
for the 2nd highest rank.
20. In some instances, from at least as early as August 2006 through approximately
January 2007, then on another occasion in approximately June 2009, Barclays Yen swaps traders
made requests for favorable Yen LIBOR settings to the Barclays Yen LIBOR submitters.
Barclays rate submitters for Yen LIBOR accommodated the requests on some occasions.
21. The purpose of this activity was to manipulate Barclays’s Dollar and Yen LIBOR
contributions and its EURIBOR contributions, whether by increasing, decreasing, or maintaining
the submitted rates, to influence the resulting LIBOR and EURIBOR fixes and thus to have a
favorable effect on the swaps traders’ trading positions. Because certain swaps traders’
compensation was based in part on the profit and loss calculation of the trading books, a purpose
of the requests by the swaps traders was to benefit their compensation as well.
22. Because of the high value of the notional amounts underlying derivative transactions
tied to LIBOR and EURIBOR, even very small movements in those rates could have a
significant impact on the profitability of a trader’s trading portfolio. As an example of the
potential impact of this activity, on September 28, 2005, in a series of electronic messages,
Trader-3 and Trader-1 discussed the next day’s 3-month LIBOR submission. Trader-3 stated,
” WE WANT TOMORROW’S FIX TO BE 4.07 MINIMUM,” repeating, ” 4.07….NOTHING
LESS…” (emphasis and ellipses in original). Trader-3 explained: ” We have turn exposure of 837
futures contracts. [F]or every 0.25 bps tomorrows [sic] fix is below 4.0525 we lose 154,687.50
usd [United States Dollars]…if tomorrows [sic] fix comes in at 4.0325 we lose 618,750 usd.”
SEC-DOJ-Barclays-statement-of-facts-27-06-2012