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Three Rabobank traders charged in US with five-year plot to fix Libor Three Rabobank traders charged in US with five-year plot to fix Libor
(about 3 hours later)
Three former Rabobank traders have been charged in the US with engaging in a five-year scheme to manipulate benchmark interest rates as international probes of rate rigging escalate.Three former Rabobank traders have been charged in the US with engaging in a five-year scheme to manipulate benchmark interest rates as international probes of rate rigging escalate.
Paul Robson, a Briton, Paul Thompson, an Australian, Tetsuya Motomura of Japan were charged on Monday with conspiracy to commit wire fraud and bank fraud, as well as two counts of wire fraud, according to a complaint filed in Manhattan federal court. None of the men are in US custody, a court official said.Paul Robson, a Briton, Paul Thompson, an Australian, Tetsuya Motomura of Japan were charged on Monday with conspiracy to commit wire fraud and bank fraud, as well as two counts of wire fraud, according to a complaint filed in Manhattan federal court. None of the men are in US custody, a court official said.
From about May 2006 to January 2011, it is alleged that the three men and unidentified “others” at the Dutch bank “agreed to make false and fraudulent yen Libor submissions for the benefit of their trading positions'', according to the government.From about May 2006 to January 2011, it is alleged that the three men and unidentified “others” at the Dutch bank “agreed to make false and fraudulent yen Libor submissions for the benefit of their trading positions'', according to the government.
If convicted, each of the three defendants faces as long as 30 years in prison.If convicted, each of the three defendants faces as long as 30 years in prison.
Robson worked as a senior trader on Rabobank’s money markets desk in London; Thompson was the bank's head of money market and derivatives trading in Singapore; while Motomura was a senior trader at Rabobank’s Tokyo desk, according to court papers.Robson worked as a senior trader on Rabobank’s money markets desk in London; Thompson was the bank's head of money market and derivatives trading in Singapore; while Motomura was a senior trader at Rabobank’s Tokyo desk, according to court papers.
“These three traders — working from Japan, Singapore and the United Kingdom — 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 in a statement.“These three traders — working from Japan, Singapore and the United Kingdom — 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 in a statement.
Global fines on companies including Deutsche Bank and Royal Bank of Scotland Group Plc reached $US6bn in December, and authorities around the world are investigating the alleged abuse of financial benchmarks by companies that play a central role in setting them. Regulators are still examining traders at half a dozen more firms.Global fines on companies including Deutsche Bank and Royal Bank of Scotland Group Plc reached $US6bn in December, and authorities around the world are investigating the alleged abuse of financial benchmarks by companies that play a central role in setting them. Regulators are still examining traders at half a dozen more firms.
Robson coordinated his yen Libor submission with the trader responsible for making the Libor position at another bank on behalf of co-defendants, the US alleged. The US also said the unidentified trader who conspired with the three defendants was a “senior trader” for Rabobank’s money market unit in Tokyo.Robson coordinated his yen Libor submission with the trader responsible for making the Libor position at another bank on behalf of co-defendants, the US alleged. The US also said the unidentified trader who conspired with the three defendants was a “senior trader” for Rabobank’s money market unit in Tokyo.
The US said Robson made a higher or lower yen Libor submission “consistent with the direction requested by a defendant and consistent with the co-defendant’s trading position”. These manipulated Libor submissions were frequently to the detriment of Rabobank’s counterparties to derivative contracts, as alleged by the US.The US said Robson made a higher or lower yen Libor submission “consistent with the direction requested by a defendant and consistent with the co-defendant’s trading position”. These manipulated Libor submissions were frequently to the detriment of Rabobank’s counterparties to derivative contracts, as alleged by the US.
The US complaint includes excerpts of e-mails, instant messages and calls that were recorded by the bank which the three defendants exchanged.The US complaint includes excerpts of e-mails, instant messages and calls that were recorded by the bank which the three defendants exchanged.
In one exchange on May 10, 2006, Robson said in an e-mail “it must be pretty embarrassing to set such a low libor. I was very embarrassed to set my 6 mth--but wanted to help thomo” in what the US prosecutors says was a reference to Thompson.In one exchange on May 10, 2006, Robson said in an e-mail “it must be pretty embarrassing to set such a low libor. I was very embarrassed to set my 6 mth--but wanted to help thomo” in what the US prosecutors says was a reference to Thompson.
In a May 19, 2006, e-mail, Thompson informed Robson that his net exposure for his three-month fixes was 125 billion yen and stated “sneak your 3 m libor down a cheeky 1 or 2 bp” because “it will make a bit of diff for me.” Robson responded that same day stating, “No prob mate I mark it low.” In a May 19, 2006, email, Thompson informed Robson that his net exposure for his three-month fixes was 125bn yen and stated “sneak your 3 m libor down a cheeky 1 or 2 bp” because “it will make a bit of diff for me.” Robson responded that same day stating, “No prob mate I mark it low.”
In an exchange on August 4, 2008, Motomura asked Robson, “Please set today’s 6mth LIBOR at 0.96 I have a chunky fixing”.In an exchange on August 4, 2008, Motomura asked Robson, “Please set today’s 6mth LIBOR at 0.96 I have a chunky fixing”.
In an telephone call on October 30, 2007, that was recorded by the bank, Robson asked Motomura: “Do you want me to set anything for you?,” to which Motomura replied that same day, “if it is lower, it’s better for me” asking for a “low 6’s please''. In an telephone call on 30 October, 2007, that was recorded by the bank, Robson asked Motomura: “Do you want me to set anything for you?,” to which Motomura replied that same day, “if it is lower, it’s better for me” asking for a “low 6’s please''.
Rates under investigation include the London interbank offered rate, or Libor, and ISDAfix, used to determine the value of interest-rate derivatives. The rates are used by banks to determine the cost of borrowing for businesses, home-buyers and students. European regulators also have reviewed allegations of collusion in crude oil and biofuels markets.Rates under investigation include the London interbank offered rate, or Libor, and ISDAfix, used to determine the value of interest-rate derivatives. The rates are used by banks to determine the cost of borrowing for businesses, home-buyers and students. European regulators also have reviewed allegations of collusion in crude oil and biofuels markets.
Regulators from Switzerland to Washington are examining evidence reported by Bloomberg News in June that currency traders have been manipulating spot foreign-exchange rates for at least a decade, affecting the value of funds and derivatives. Those inquiries look at benchmark WM/Reuters rates, which are determined by trades executed in a minute-long period called “the fix” at 4 p.m. in London each day.Regulators from Switzerland to Washington are examining evidence reported by Bloomberg News in June that currency traders have been manipulating spot foreign-exchange rates for at least a decade, affecting the value of funds and derivatives. Those inquiries look at benchmark WM/Reuters rates, which are determined by trades executed in a minute-long period called “the fix” at 4 p.m. in London each day.
Probes of benchmark rates are prompting financial firms to overhaul internal controls and business practices, such as by reining their employees’ use of electronic chat rooms. In November, foreign-exchange dealers from the world’s biggest banks told the Federal Reserve Bank of New York that inquiries in their market could prompt an overhaul of the way they handle customer orders.Probes of benchmark rates are prompting financial firms to overhaul internal controls and business practices, such as by reining their employees’ use of electronic chat rooms. In November, foreign-exchange dealers from the world’s biggest banks told the Federal Reserve Bank of New York that inquiries in their market could prompt an overhaul of the way they handle customer orders.
The US alleged the three former Rabobank employees traded in derivative products that referenced yen Libor. Rabobank on October 29 entered into a deferred prosecution agreement with the U.S. Justice Department as part of its investigation in benchmarks including Libor and agreed to pay a $325 million penalty. The US alleged the three former Rabobank employees traded in derivative products that referenced yen Libor. Rabobank on 29 October entered into a deferred prosecution agreement with the US justice department as part of its investigation in benchmarks including Libor and agreed to pay a $325m penalty.
A spokeswoman for Rabobank declined to comment yesterday. A spokeswoman for Rabobank declined to comment on Monday.
The US Libor probe has led to criminal charges against eight individuals and resulted in more than $3.7 billion in penalties paid to law enforcement and regulatory agencies. The US Libor probe has led to criminal charges against eight individuals and resulted in more than $3.7bn in penalties paid to law enforcement and regulatory agencies.
In December 2012, Tom Hayes, a former UBS and Citigroup trader was charged with manipulation of benchmark interest rates by the US. He was accused of conspiring with employees of JP Morgan, HSBC, RBS, Rabobank and Deutsche, over a four-year period to manipulate yen Libor rates.
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