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Tuesday, July 24, 2012

Libor: What Criminal Charges Are Likely?

English: The U.S. Securities and Exchange Comm...
English: The U.S. Securities and Exchange Commission headquarters located at 100 F Street, NE in the Near Northeast neighborhood of Washington, D.C. (Photo credit: Wikipedia)
The news that U.S. prosecutors are close to arresting traders in connection with the Libor scandal gives rise to the question: what criminal charges are prosecutors likely to levy? Until now, the official response to Libor has mostly been on the regulatory side. Barclayspaid huge fines to settle claims by the Commodities Futures Trading Commission and U.K. regulators. Barclays' CEO, Bob Diamond, was forced to step down under regulatory pressure.
Agencies like the CFTC and the Securities and Exchange Commission do not have the authority to level criminal charges, although they do refer cases of possible criminality to the Justice Department. And it is clear from the Barclays[BCS  9.58    -0.33  (-3.33%)   ] settlement that the Justice Department has been investigating allegations of Libor manipulation and deceit.
Libor is a key global reference point for interest rates. It reportedly touches on some $500 trillion of transactions. Each day a number of the largest global banks submit their Libor “fixing,” a number that is supposed to represent what it would cost for them to borrow a reasonably large sum of money on that day. ... Continue to read.
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