Barclays to Pay $100 Million To Resolve States' Libor Manipulation Claims--Update

By Aruna Viswanatha 

Barclays PLC agreed to pay $100 million to end investigations by 43 states and the District of Columbia into its alleged manipulation of the London interbank offered rate benchmark in the mid-2000s, authorities said on Monday.

The settlement comes four years after the British bank resolved similar charges with U.S. and U.K. authorities that had ignited a firestorm and led to the resignation of its top leadership. Attorneys general from multiple states led by New York and Connecticut launched their own probes in 2012 in the wake of those charges.

The states said government entities and not-for-profit groups in their states were "defrauded of millions of dollars" when they entered into swaps or other financial contracts based on Libor, without knowing that Barclays and other banks were working to manipulating the benchmark, according to a copy of the agreement announced Monday.

"There has to be one set of rules for everyone, no matter how rich or how powerful," New York Attorney General Eric Schneiderman said in announcing the deal.

A Barclays spokesman said the bank was pleased to have resolved the state investigations into "legacy" activities.

Multiple global banks including UBS Group AG and Deutsche Bank AG have paid billions of dollars in penalties to resolve similar criminal and civil charges that they manipulated Libor, which is calculated based on submissions from a panel of banks.

In connection with the earlier settlements, Barclays and other banks admitted to submitting inaccurate rates in an effort to move the benchmark in a way that would benefit their trading positions. Barclays also admitted to making inaccurate submissions during the financial crisis to disguise liquidity problems.

Barclays is the first to resolve Libor manipulation allegations from state attorneys general, and neither admitted nor denied the states' allegations.

In the agreement, the states said their investigations into Libor manipulation were "ongoing," and that Barclays's cooperation "has been extensive" and "of substantial value in furthering" the probes.

New York said the states would use $93.35 million portion to pay "restitution" to agencies and organizations that lost money on Libor-linked products. The rest of the fund will be used to cover investigative costs and other uses, the state said.

Around $350 trillion of notional swaps and $10 trillion of loans were indexed to Libor as of 2012, according to the British Bankers' Association.

Last month, four former Barclays employees were sentenced to prison terms by a London court in connection with the same scheme.

Write to Aruna Viswanatha at [e-mail]

(END) Dow Jones Newswires

August 08, 2016 12:48 ET (16:48 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.