Three former traders at Rabobank — British, Australian and Japanese nationals — were charged in the US on Monday for manipulating LIBOR benchmark interest rates.
The charges come less than three months after Rabobank agreed to a deferred prosecution deal with the US Department of Justice as part of its LIBOR manipulation probe, and agreed to pay a penalty of US$325 million.
Briton Paul Robson, Australian Paul Thompson and Japanese Tetsuya Motomura were charged in New York as conspirators in the rate-manipulation scheme.
They were charged with conspiracy to commit wire fraud and bank fraud, as well as substantive counts of wire fraud.
If convicted, the men each face up to 30 years in prison for each count.
The three “deliberately submitted what they called ‘obscenely high’ or ‘silly low’ LIBOR rates in order to benefit their own trading positions,” Acting Assistant US Attorney General Mythili Raman said.
“The illegal manipulation of this cornerstone benchmark rate undermines the integrity of the markets,” Raman added.
In May 2006, Thompson informed Robson that his net exposure for his three-month fixes was ￥125 billion, and then e-mailed to ask him to “sneak your 3 million LIBOR down a cheeky 1 or 2 bp” because “it will make a bit of diff for me.”
Robson then replied: “No prob mate I mark it low.”
LIBOR (the London interbank offered rate) is a global benchmark that is calculated daily, using estimates from banks of their own interbank rates.
It underpins the terms of US$500 trillion of contracts from mortgages to the cost of corporate lending.
However, the system has been found to be open to abuse, with some traders lying about borrowing costs to boost trading positions or make their bank seem more secure.
Over a period of six years between May 2005 and January 2011, Rabobank allowed money market traders to manipulate LIBOR submissions that would benefit foreign currency trading positions, according to prosecutors.