Rabobank fined by CFTC and British authority
October 29, 2013 | 06:14 PM
Rabobank, the Dutch-based farm bank that has expanded throughout rural America in recent years, today was fined $475 million by the Commodity Futures Trading Commission and 105 million British pounds (approximately $170 million) by the British Financial Conduct Authority for its role in attempted manipulation of the London Interbank Offered Rate (LIBOR) for U.S. dollar, yen and sterling, and of the Euro Interbank Offered Rate (Euribor) and charges of successful manipulation of yen LIBOR.
The CFTC said that the agency “also settled charges that Rabobank, at times, aided and abetted the attempts of derivatives traders at other banks to manipulate Yen LIBOR and Euribor. These violations, which spanned nearly six years, involved more than two dozen employees working out of six offices on three continents. Rabobank is obligated to pay a penalty of $475 million, and the company is ordered to take further steps to ensure the integrity of its LIBOR and other benchmark interest rate submissions in the future.”
The actions were violations of the Commodity Exchange Act, the CFTC said.
Gretchen Lowe, acting director of enforcement-designate at the CFTC, commented in a news release, “For years, Rabobank allowed profit-driven traders located in offices around the globe to corrupt the submission process for critical benchmark interest rates. When an institution threatens the integrity of the financial markets, we bring the full force of our authority to bear. Accordingly, today the Commission holds Rabobank accountable for its egregious, manipulative misconduct.”
The CFTC explained that Rabobank was one of the global banks that submitted borrowing rate information on a daily basis for use in the calculation of LIBOR for various currencies and for Euribor. Rabobank also traded and held cash and derivatives positions whose value depended on these same benchmarks.
“From at least mid-2005 through early 2011, Rabobank traders engaged in hundreds of manipulative acts undermining the integrity of U.S. dollar and yen LIBOR, Euribor and, to a lesser extent, sterling LIBOR,” the CFTC said.
The Japanese Financial Services Agency issued an administrative action against Rabobank for failure of its internal controls within its Tokyo office; De Nederlandsche Bank (Dutch National Bank) took action by imposing remedial measures on Rabobank; and the Dutch Public Prosecutor’s Office agreed to a payment of 70 million euros (approximately $96.5 million) by Rabobank in order for Rabobank to avoid a criminal prosecution, the CFTC added.
The CFTC said that the agency “also settled charges that Rabobank, at times, aided and abetted the attempts of derivatives traders at other banks to manipulate Yen LIBOR and Euribor. These violations, which spanned nearly six years, involved more than two dozen employees working out of six offices on three continents. Rabobank is obligated to pay a penalty of $475 million, and the company is ordered to take further steps to ensure the integrity of its LIBOR and other benchmark interest rate submissions in the future.”
The actions were violations of the Commodity Exchange Act, the CFTC said.
Gretchen Lowe, acting director of enforcement-designate at the CFTC, commented in a news release, “For years, Rabobank allowed profit-driven traders located in offices around the globe to corrupt the submission process for critical benchmark interest rates. When an institution threatens the integrity of the financial markets, we bring the full force of our authority to bear. Accordingly, today the Commission holds Rabobank accountable for its egregious, manipulative misconduct.”
The CFTC explained that Rabobank was one of the global banks that submitted borrowing rate information on a daily basis for use in the calculation of LIBOR for various currencies and for Euribor. Rabobank also traded and held cash and derivatives positions whose value depended on these same benchmarks.
“From at least mid-2005 through early 2011, Rabobank traders engaged in hundreds of manipulative acts undermining the integrity of U.S. dollar and yen LIBOR, Euribor and, to a lesser extent, sterling LIBOR,” the CFTC said.
The Japanese Financial Services Agency issued an administrative action against Rabobank for failure of its internal controls within its Tokyo office; De Nederlandsche Bank (Dutch National Bank) took action by imposing remedial measures on Rabobank; and the Dutch Public Prosecutor’s Office agreed to a payment of 70 million euros (approximately $96.5 million) by Rabobank in order for Rabobank to avoid a criminal prosecution, the CFTC added.
