Barclays announced it would pay out over $450 million to regulators in the United States and the United Kingdom to settle allegations that employees tried to manipulate the interbank lending rate in London that is the rate for over $350 trillion in contracts across the globe. The payout covers the Department of Justice, the U.S. Commodity Futures Trading Commission and the UK Financial Services Authority. A penalty of $200 million was imposed by the CFTC, one for $160 million by the DOJ and $95 million by the FSA.
Unlike many deals that are in U.S. the settlement includes a final notice in detail from the FSA that Barclays admits to failings. Barclays said its CEO Bob Diamond, and three senior executives will forgo annual bonuses for the year.
The investigation were two-fold; whether banks on the panel deliberately lied in regard to the rate at which they were able to borrow to make themselves look stronger; and if traders at hedge funds and banks sought to move the rates around to generate profits.
While almost every bank on the panels had been given subpoenas or directives to handover information, Barclays was the target of regulators because of a number of emails suggesting confidentiality barriers between Libor rate-setters and traders might have been broken.
In March, the bank said in its annual report for 2011 that it was informed by regulators it was facing potential proceedings and it was also in discussions with the same authorities on a possible resolution. Both the FSA and bank would not comment on Wednesday afternoon.