A GLOBAL CONSPIRACY—Houston Sues LIBOR Cartel 23 July 2013 for Price Fixing and other Antitrust Violations


For Complete Text of this Major, Historic, Complaint: CITY OF HOUSTON – Plaintiff v BANK OF AMERICA CORPORATION – Bank of America NA – Ba

2013 WL 3810496 (S.D.Tex.) (Trial Pleading)

United States District Court, S.D. Texas.

CITY OF HOUSTON; Plaintiff,

v.

BANK OF AMERICA CORPORATION; Bank of America, N.A.; Bank of Tokyo-Mitsubishi UFJ Ltd.; Barclays Bank PLC; Citigroup, Inc.; Citibank, N.A.; Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank); Credit Suisse Group Ag; Deutsche Bank Ag; Hsbc Holdings PLC; Hsbc Bank PLC; Jpmorgan Chase & Co.; Jpmorgan Chase Bank, N.A.; Lloyds Banking Group PLC; Hbos PLC; Royal Bank of Canada; the Norinchukin Bank; Societe Generale, S.A. the Royal Bank of Scotland Group PLC. UBS AG; Portigon AG; and Westdeutsche Immobilienbank AG, Defendants.

No. 4:13CV02149.

July 23, 2013.

Jury Trial Demanded

Plaintiff’s Original Complaint

Richard Warren Mithoff, Texas Bar # 14228500; Fed. Bar # 2012, rmithoff @mithofflaw.com, Sherie Potts Beckman, Texas Bar # 16182400; Fed. Bar # 11098, sbeckman@mithofflaw.com, Warner V. Hocker, Texas Bar # 24074422; Fed. Bar # 1133732, whocker@mithofflaw.com, Mithoff Law Firm, One Allen Center, 500 Dallas Street, Houston, TX 77002, Telephone: (713) 654-1122, Facsimile: (713) 739-8085, Attorney-In-Charge.

Of Counsel: David M. Feldman, City Attorney, State Bar # 06886700; Fed. Bar # 2994, Lynette K. Fons, First Assistant City Attorney for Litigation, State Bar # 13968100; Fed. Bar # 10562, Judith L. Ramsey, Chief, General Litigation Section, State Bar # 16519550; Fed. Bar # 1124189, Malinda York Crouch, Senior Assistant City Attorney, State Bar #22165000; Fed. Bar. # 2095, City of Houston Legal, Department, 900 Bagby, 4th Floor, Houston, Texas 77002, Telephone: (832) 393-6468, Facsimile: (832) 393-6259.

Of Counsel: Joseph W. Cotchett (Cal. SBN # 36324), jcotchett@cpmlegal.com, Nanci E. Nishimura (Cal. SBN # 152621), nnishimura@cpmlegal.com, Frank C. Damrell, Jr. (Cal. SBN # 37126), fdamrell@cpmlegal.com, Aron K. Liang (Cal. SBN # 228936), aliang@cpmlegal.com, Cotchett, Pitre & McCarthy, LLP, San Francisco Airport Office Center, 840 Malcolm Road, Burlingame, CA 94010, Telephone: (650) 697-6000, Facsimile: (650) 697-0577.

Of Counsel: Felix Chevalier, Texas Bar # 24035767; Fed. Bar # 32810, fchevalier@chevalierlaw.com, The Chevalier Law Firm, PLLC, 1330 Post Oak Boulevard, Suite 1600, Houston, Texas 77056, Telephone: (713) 893-0500, Facsimile: (713) 513-5530, Attorneys for Plaintiffs.

Plaintiff City of Houston (“Plaintiff” or “Houston”), hereby brings this action for damages and relief against Defendants Bank of America Corporation, Bank of America, N.A. (the “BofA Defendants” or “BofA”), Bank of Tokyo-Mitsubishi UJF Ltd. (“Tokyo-Mitsubishi”), Barclays Bank, PLC (“Barclays”), Citigroup, Inc., Citibank, N.A. (“Citigroup Defendants” or “Citigroup”), Cooperatieve Central Raiffseisen-Boerenleenbank, B.A. (“Rabobank”), Credit Suisse Group AG (“Credit Suisse”), Deutsche Bank AG (“Deutsche Bank”), HSBC Holdings PLC, HSBC Bank PLC (“HSBC Defendants” or “HSBC”), JPMorgan Chase & Co., JPMorgan Chase Bank, N.A. (“JPMorgan Defendants” or “JPMorgan”), Lloyds Banking Group PLC (“Lloyds”), HBOS PLC, (“HBOS”), Royal Bank of Canada (“RBC”), The Norinchukin Bank (“Norinchukin”), Societe Generale, S.A. (“SocGen”) The Royal Bank of Scotland Group PLC (“RBS”), UBS AG (“UBS”), Portigon AG, and WestDeutsche ImmobilienBank AG (“WestLB Defendants” or “WestLB”) (hereinafter referred to collectively as “Defendants”) for violations of federal antitrust laws (the “Sherman Act” and the “Clayton Act”), Texas antitrust laws (“Free Enterprise and Antitrust Act”) (Texas. Bus. & C. Code § 15.01, et. seq.) as well as for violations of Texas state common law. Plaintiff complains and alleges upon information and belief except as to those paragraphs that are based on personal knowledge, as follows: COMPLAINT

TABLE OF CONTENTS

 

I. INTRODUCTION ……………………………………………………………………………………………………………………………………………….

2

II. JURISDICTION AND VENUE ……………………………………………………………………………………………………………………..

10

III. PARTIES ………………………………………………………………………………………………………………………………………………………….

12

A. Plaintiff ………………………………………………………………………………………………………………………………………………………………..

12

B. Defendants …………………………………………………………………………………………………………………………………………………………..

13

C. Unnamed Co-Conspirators ………………………………………………………………………………………………………………………………

17

D. Agents and Co-Conspirators …………………………………………………………………………………………………………………………..

18

IV. FACTUAL ALLEGATIONS …………………………………………………………………………………………………………………………

18

A. The London Interbank Offered Rate Defined ………………………………………………………………………………………………..

18

B. Defendants’ Widespread Conspiracy to Manipulate LIBOR is Supported by Substantial Evidence ..

27

C. Defendants Had Financial Incentives to Conspire to Manipulate LIBOR ………………………………………………

29

D. Defendants’ LIBOR Manipulation Harmed Numerous Types of Financial Investments …………………….

36

E. Defendants Colluded with Each Other To Suppress USD LIBOR ………………………………………………………….

40

1. Each Defendant Knew Other LIBOR Member Banks Were Manipulating LIBOR ……………………………….

41

2. Defendant Member Banks Manipulated LIBOR Collectively in “Packs” ………………………………………………

47

3. Defendants’ LIBOR Manipulation Succeeded as a “Pack” by Sharing Confidential LIBORs ……………

51

F. Defendants Conspired to Manipulate LIBOR To Benefit Individual Trading Positions. ……………………

55

1. RBS’ Role in LIBOR Manipulation ……………………………………………………………………………………………………………..

56

2. UBS and Thomas Hayes’ Role in LIBOR Manipulation ………………………………………………………………………….

58

3. Barclays’ Role in LIBOR Manipulation ……………………………………………………………………………………………………….

69

G. Defendants Conspired to Manipulate Yen and USD LIBOR. …………………………………………………………………..

70

H. Government Investigations Reveal the Global Scope of the LIBOR Manipulation Conspiracy by Defendants and Unnamed Co-Conspirators ………………………………………………………………………………………………………..

73

1. Public Documents and Regulatory Filings Reveal Defendants’ Involvement in LIBOR Manipulation ……………………………………………………………………………………………………………………………………………………………

75

2. Barclays Settles Criminal and Civil Claims In Exchange for Cooperating with Prosecutors and Regulatory Authorities in the United Kingdom and United States ………………………………………………………………

84

3. UBS Settles Criminal and Civil Claims In Exchange for Cooperating with Prosecutors and Regulatory Authorities in the United Kingdom, United States, and Switzerland ……………………………………..

98

4. The First Individuals Face Criminal Charges And Arrests ……………………………………………………………………….

100

5. The Royal Bank of Scotland Refuses to Comply with Order to Produce Documents on Its Involvement in the Global LIBOR Manipulation Conspiracy ……………………………………………………………………….

101

6. The Royal Bank of Scotland Settles Criminal and Civil Claims In Exchange for Cooperating with Prosecutors and Regulatory Authorities in the United Kingdom and the United States …………………………..

102

7. Evidence Disclosed to Date in Canada and Singapore Confirms that Certain Defendants Conspired to Manipulate Yen-LIBOR ……………………………………………………………………………………………………………………………………

104

a. Canadian Investigation ………………………………………………………………………………………………………………………………………

104

b. Singaporean Legal Action ………………………………………………………………………………………………………………………………..

109

I. Independent Analyses By Consulting Experts Indicate Defendants Artificially Suppressed LIBOR ….

110

J. Empirical Analyses Indicate LIBOR’s Artificial Suppression …………………………………………………………………..

137

1. The Discrepancy Between Defendants’ reported LIBOR and Their CDS Spreads Indicates the Banks Misrepresented Their Borrowing Costs to the BBA ……………………………………………………………………………………….

137

2. Cross-Currency Discrepancies in Defendants’ LIBOR Submissions Indicate They Suppressed USD-LIBOR. …………………………………………………………………………………………………………………………………………………………………….

142

3. The Frequency With Which at Least Certain Defendants’ LIBOR Submissions “Bunched” Around the Fourth-Lowest Quote of the Day Suggests Manipulation ………………………………………………………………………..

143

4. LIBOR’s Divergence from its Historical Relationship with the Federal Reserve Auction Rate Indicates Suppression …………………………………………………………………………………………………………………………………………….

145

5. LIBOR’s Divergence from its Historical Correlation to Overnight Index Swaps Also Suggests it Was Artificially Suppressed ………………………………………………………………………………………………………………………………….

145

6. Additional Data Suggest LIBOR May Have Been Manipulated as Early as August 2006 ………………….

146

K. Defendants Faced Difficult Financial Circumstances Which Were Not Reflected in Their LIBOR Submissions …………………………………………………………………………………………………………………………………………………………….

147

1. Defendant Citigroup …………………………………………………………………………………………………………………………………………..

148

2. Defendants RBS, Lloyds, and HBOS ……………………………………………………………………………………………………………

149

3. Defendant WestLB …………………………………………………………………………………………………………………………………………….

151

L. Defendants Made Material Misrepresentations and Concealed Information They Had A Duty to Disclose to Plaintiff Houston. ………………………………………………………………………………………………………………………………

152

V. PLAINTIFF DID NOT KNOW, NOR COULD IT REASONABLY HAVE KNOWN, ABOUT DEFENDANTS’ MISCONDUCT UNTIL AT LEAST MARCH 2011 …………………………………………………………..

154

A. Defendants’ Unlawful Activities Were Inherently Self-Concealing ………………………………………………………….

155

B. The British Bankers’ Association and Defendants Deflected Concerns Raised by Market Observers and Participants About LIBOR’s Accuracy ……………………………………………………………………………………………………….

156

C. Plaintiff Could Not Have Known or Reasonably Discovered-Until at Least March 2011-Facts Suggesting Defendants Knowingly Colluded to Suppress LIBOR ……………………………………………………………….

158

D. The Statute of Limitations is Tolled by the American Pipe Doctrine ……………………………………………………

159

VI. PLAINTIFF HAS SUFFERED SIGNIFICANT INJURY AS A RESULT OF DEFENDANTS’ LIBOR MANIPULATION CONSPIRACY ……………………………………………………………………………………………………….

159

A. Defendants’ Manipulation of LIBOR Broadly Impacted LIBOR-Based Financial Instruments and Investments ………………………………………………………………………………………………………………………………………………………………

159

B. Plaintiff Transacted LIBOR-Based Financial Instruments That Paid Artificially Low Interest Rates or Charged Artificially High Interest Rates ………………………………………………………………………………………………………..

161

C. Plaintiff Suffered Antitrust Injury ……………………………………………………………………………………………………………………

163

D. Specific Examples of Plaintiffs LIBOR-Based Financial Instruments ……………………………………………………..

171

VII. CLAIMS FOR RELIEF ………………………………………………………………………………………………………………………………….

173

FIRST CAUSE OF ACTION VIOLATIONS OF SHERMAN ANTITRUST ACT (15 U.S.C. §§ 1, ETSEQ.) …………………………………………………………………………………………………………………………………………………………………..

173

SECOND CAUSE OF ACTION VIOLATIONS OF TEXAS FREE ENTERPRISE AND ANTITRUST ACT (TEX. Bus. & COM. CODE §§ 15.01 et seq.) ………………………………………………………….

175

THIRD CAUSE OF ACTION FRAUD AND DECEIT (AFFIRMATIVE AND CONCEALMENT) ..

178

FOURTH CAUSE OF ACTION NEGLIGENT MISREPRESENTATION …………………………………………….

180

FIFTH CAUSE OF ACTION INTERFERENCE WITH ECONOMIC ADVANTAGE ……………………….

182

SIXTH CAUSE OF ACTION BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING …………………………………………………………………………………………………………………………………………………….

183

SEVENTH CAUSE OF ACTION UNJUST ENRICHMENT …………………………………………………………………….

184

VIII. PRAYER FOR RELIEF ……………………………………………………………………………………………………………………………….

185

IX. JURY TRIAL DEMAND …………………………………………………………………………………………………………………………………

187

I. INTRODUCTION

1. This case is about the global conspiracy to manipulate the London Interbank Offered Rate (“LIBOR”), a benchmark interest rate that was once viewed as one of the most trustworthy foundations of the global financial system. It was because of that trust that LIBOR became one of the central benchmark interest rates used to set the rates for a vast array of financial instruments worth trillions of dollars, from Credit Default Swaps (“CDS”) to variable rate fixed income instruments to consumer loans including home mortgages. In the simplest terms, LIBOR is intended to represent the interest rate that a Defendant LIBOR member bank could borrow from other LIBOR member banks on any given date, depending on the currency and the duration of the loan. This rate is set by the LIBOR member banks each day and is intended to reflect the true cost of borrowing in any given economic environment, representing the amount of interest that one financial institution would charge for lending money to another financial institution in an arms-length transaction.

2. Because LIBOR was believed to represent the true cost of borrowing, it could be and was used as a benchmark for setting interest rates for many types of transactions. LIBOR is one of the most commonly used benchmark rates in the world, impacting everything from complex billion or multi-million dollar derivative contracts involving institutional investors, corporations and public entities, to simple bank loans for small businesses and individuals, to home mortgage loans taken out by individual American citizens. Variable mortgage rates, for example, can be pegged to LIBOR. Interest rates on variable rate instruments are often expressed at LIBOR plus X number of basis points, where a single basis point represents one one-hundredth of a percentage point (0.01%).

3. Defendants are global financial institutions involved in setting LIBOR each day, also referred to as LIBOR member banks. Defendants manipulated LIBOR, as well as other global benchmark interest rates that negatively impacted Plaintiff and, in doing so, deprived Plaintiff of the rate of interest that Plaintiff should have received from its investments or financial instruments. At various times, Defendants manipulated LIBOR by both inflating and suppressing the interest rate at which an individual LIBOR member bank could borrow funds from other banks. Defendants manipulated LIBOR to increase their own revenues, and suppressed LIBOR artificially low to create the illusion of creditworthiness by suggesting that if their borrowing rate was low they were not a credit risk. By acting in concert to knowingly overstate or understate their true borrowing costs, Defendants caused LIBOR to be calculated artificially, and reaped hundreds of millions, if not billions, of dollars in illegitimate gains.

4. From at least as early as August of 2007, the Defendant banks conspired to, and did, manipulate LIBOR by misreporting to the British Bankers’ Association (“BBA”) the accurate interest rate at which each expected they could borrow funds from the other LIBOR member banks. In the case of artificially suppressing LIBOR, Defendants were able to significantly reduce, for example, the amount that should be paid to counterparties, including Plaintiff.

5. LIBOR is the benchmark interest rate used for a vast array of commercial and consumer financial transactions worth trillions of dollars annually. LIBOR rates are set for ten different currencies for 50 different maturity dates, covering millions, if not hundreds of millions of transactions. The fact that trillions of dollars in financial transactions can be linked to LIBOR demonstrates the confidence that has been placed on the reliability and trustworthiness of LIBOR and the banks that set LIBOR. It also explains, however, why the financial institutions at the heart of this conspiracy chose to manipulate LIBOR. In the midst of one of the worst economic crises in world history and with billions of dollars at stake, the financial institutions engaged in improper and illegal LIBOR rate manipulation in order to deceive the public and to reap massive profits to the detriment of institutional and individual investors.

6. The Defendants are members of the BBA. LIBOR is set based on information provided by each member bank to the BBA on a daily basis regarding their interbank borrowing rate. This information is used by BBA and Thomson Reuters to calculate approximately 150 different LIBOR rates for the ten different currencies and 50 different durations. From all of the interest rates reported by the BBA member banks to BBA and Thomson Reuters, the highest and lowest quartiles are removed and the middle two quartiles are averaged to reach the benchmark LIBOR rate. This is done in an effort to prevent isolated incidents of deception. By removing the highest and lowest quartiles, the BBA sought to prevent a single financial institution or even three or four, from manipulating LIBOR. LIBOR could not be manipulated without the knowing involvement of most, if not all of the BBA member banks.

7. Since being publically made known in 2011, investigations into the manipulation of LIBOR have been ongoing in the United States, United Kingdom, Switzerland, the European Union, Japan, Canada, and Singapore. In the United States, several government agencies are involved, including the U.S. Department of Justice (“DOJ”), U.S. Commodity Futures Trading Commission (“CFTC”), and the U.S. Securities and Exchange Commission (“SEC”).

8. In March of 2011, government regulators and prosecutors from many different countries announced that they were investigating LIBOR rate manipulation at financial institutions around the world. Plaintiff, like so many others, relied on and believed in the trustworthiness of the BBA, its member banks and the LIBOR rate calculation system. The announcement of government investigations into potential widespread collusion amongst the BBA member banks to manipulate one of the bedrock benchmark interest rates used by everyone from investors, lenders, banks and pension funds to value and price financial instruments has shaken the global financial system, with the global economy still on rocky ground. Revelations of such a wide-ranging scandal have raised serious questions about the integrity of LIBOR and other global benchmark interest rates.

9. Barclays and UBS were two of the first financial institutions to acknowledge the existence of the LIBOR rate manipulation conspiracy and their involvement in it. In a settlement deal announced on June 27, 2012, Barclays agreed to pay £290 million ($453.6 million) as part of a settlement with the U.K. Financial Services Authority (“FSA”), the CFTC, the DOJ’s Fraud Section, and others relating to its involvement in the LIBOR rate manipulation. Barclays was the first financial institution to settle potential criminal and regulatory claims against it. Barclays admission that it was involved in a widespread LIBOR manipulation scandal resulted in the resignation of Barclays’ Chief Executive Officer Bob Diamond. UBS has also sought amnesty from government investigators and antitrust regulatory authorities for its involvement in the LIBOR rate manipulation. UBS has announced that it has requested and received conditional immunity from prosecution from the Swiss Competition Commission and the U.S. Department of Justice for its cooperation in the investigation.

10. According to documents and evidence that have been made public, it is evident that the LIBOR rate manipulation lasted for years and was widespread. According to a Reuters news article on Sunday, July 22, 2012, U.S. prosecutors and European regulators plan to arrest individual traders employed by the Defendants and charging them with colluding to manipulate global benchmark interest rates, including LIBOR. This wide-ranging and sweeping investigation into the rigging of interest rates began with LIBOR but the evidence uncovered has revealed that the rate-rigging scandal has impacted many different global benchmark rates, such as EURIBOR.

11. According to sources, U.S. federal prosecutors have recently contacted lawyers representing individual traders under investigation and notified them that arrests and criminal charges could be brought against their clients in the next few weeks. In similar prosecutions of this nature, criminal charges and indictments have continued for years after the investigation had begun as individuals and entities are either convicted or agree to cooperate with authorities. According to government investigators and regulators from the U.S., Europe and elsewhere, their investigations have revealed a fuller picture of the rate-rigging conspiracy, which impacts LIBOR and other global benchmark interest rates that underpin hundreds of trillions of dollars in assets.

12. A source familiar with the European investigation told Reuters that “[m]ore than a handful of traders at different banks are involved.” According to Reuters, U.S. investigators believe that more than a dozen current and former employees of several large financial banks are under investigation, including Defendants Barclays, UBS, Citigroup, HSBC and Deutsche Bank. In the United States, the regulatory investigation into LIBOR rate manipulation is led by the CFTC, which has made the LIBOR investigation one of its top priorities.

13. In a Reuters article dated July 20, 2012, sources indicate that there is interest by a number of the Defendants in this case to enter into a group settlement with global regulators. Based on the evidence available to government investigators, some of which has been made public, there is substantial evidence showing the existence of a conspiracy to manipulate global benchmark interest rates and the involvement of the Defendants in this conspiracy.

14. The Defendant LIBOR banks in this case engaged in illegal and improper conduct and engaged in a criminal conspiracy that caused harm to public entities and hundreds of millions of people around the world, both directly and indirectly. Defendants did this in order to protect their own self-interests and to reap millions or billions of dollars in improper and unwarranted gains without regard to the detriment of public entities and their citizens. The Defendants’ deceptive and illegal acts have damaged Plaintiff and Plaintiff brings this lawsuit in order to recover those monies that were improperly taken from itself and its constituents and beneficiaries.

15. Except as alleged herein, Plaintiff does not have access to the underlying facts relating to Defendants’ improper conduct. Such information is exclusively within the possession, custody and control of the Defendant banks and other insiders and unnamed co-conspirators, which prevents Plaintiff from further detailing Defendants’ misconduct. Moreover, numerous pending government investigations – both domestic and foreign, including by the DOJ, CFTC, SEC, U.K. FSA, and the European Commission – concerning potential LIBOR manipulation and collusion could yield information from Defendants’ internal records or personnel that bears significantly on Plaintiff’s claims. Indeed, as one news report observed in detailing U.S. regulators’ ongoing investigation, “[i]ntemal bank emails may prove to be key evidence…because of the difficulty in proving that banks reported borrowing costs for LIBOR at one rate and obtained funding at another.”1 Plaintiff thus believes further evidentiary support for its allegations will be revealed after it has a reasonable opportunity to conduct discovery.

Footnotes

16. To date, more than $2.6 billion has been paid to settle only the U.S. and U.K. investigations of LIBOR manipulation by only three of the Defendant LIBOR member banks: UBS ($1.5 Billion), Royal Bank of Scotland ($610 Million), and Barclays ($453 Million). The settlement statements include revealing admissions and documentary evidence confirming: (i) the Defendant LIBOR member banks engaged in a conspiracy to manipulate the benchmark interest rate, and (ii) the conspiracy was on a global scale. Examples of admissions about the conspiracy include the following:

• In August 2007, a senior RBS trader of Yen LIBOR told one of his colleagues that LIBOR is a “cartel now in London.”2 This price-fixing cartel existed from August 2007 through May 2010.

1 David Enrich, Carrick Mollenkamp & Jean Eaglesham, “U.S. Libor Probe Includes Bof A, Citi, UB S,” Market Watch, March 17, 2011.

• On November 29, 2007, Barclays learned the confidential USD LIBOR submissions of every defendant before they were made public and adjusted its LIBOR submission downward by 20 basis points in order to stay within the pack of other banks’ low LIBOR submissions.3 Barclays managers issued standing instructions to stay within specific ranges of other panel banks’ LIBOR submissions, indicating that Barclays believed that it would have continued access to every other panel bank’s confidential LIBOR submissions before they were published. According to the CFTC’s review of the evidence it collected, “Senior Barclays Treasury managers provided the [LIBOR] submitters with the general guidance that Barcays’s submitted rates should be within ten basis points of the submissions by the other U.S. Dollar panel banks …”4

2 In the Matter of The Royal Bank of Scotlandplc and RBS Securities Japan Limited, CFTC Docket No. 13-14. Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, Making Findings and Imposing Remedial Sanctions (Feb. 6, 2013) (“RBS CFTC” at 14).
3 Financial Services Authority, Final Notice to Barclays Bank Plc (June 27, 2012) (“Barclays FSA”) ¶118.

• That same day, on November 29, 2007, a Barclays manager explained that “other panel banks ‘are reluctant to post higher and because no one will get out of the pack the pack sort of stays low.”’5 Barclays and UBS admitted that they issued and obeyed instructions to stay within the pack of other banks’ low LIBOR submissions during large portions of the Relevant Period.

4 In the matter of Barclays, PLC, Barclays Bank PLC, and Barclays Capital, Inc., CFTC Docket No. 12-25, Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, as Amended, Making Findings and Imposing Remedial Sanctions (June 27, 2012) (“Barclays CFTC”) at 20 (emphasis added).

• In communications between November 2007 and October 2008, Barclays’ employees revealed that “all of the Contributor Panel banks, including Barclays, were contributing rates that were too low.”6

5 Letter from Denis J. McInerney, Chief, Criminal Division, Fraud Section, United States Department of Justice, Appendix A (June 26, 2012) (“Barclays SOF”) ¶ 43 (emphasis added).

• On April 27, 2008, a Barclays manager conceded “to the extent that, um, the LIBORs have been understated, are we guilty of being part of the pack? You could say we are.”7 As one Barclays submitter put it, “just set it where everyone else sets it, we do not want to be standing out.”8

6 Barclays SOF ¶ 42.
7 Barclays FSA ¶ 131 (emphasis added).

• In April 2008, the BBA acknowledged that no panel banks were “clean-clean” and that it understood what would happen to any bank that “moved against the trend of lower submissions.

• On May 21, 2008, when a Wall Street Journal reporter asked UBS by email why UBS had been “paying 12 basis points for [commercial paper] more than it was posting as a Libor quote,” a senior manager at UBS told another senior UBS manager that “the answer would be ‘because the whole street was doing the same and because we did not want to be an outlier in the libor fixings, just like everybody else.’ ”9

8 Barclays FSA ¶ 123.

• On June 18, 2008, two UBS employees explained why it was important for banks to collusively suppress as part of an anticompetitive pack: “… [Senior Manager B] want[s] us to get in line with the competition by Friday … if you are too low you get written about for being too low … if you are too high you get written about for being too high.10

9 Letter from Denis J. McInerney, Chief, Fraud Section, Criminal Division, United States Department of Justice (Dec. 18, 2012) (“UBS SOF”) ¶ 117.

• Between June 2008 and April 2009, “UBS’s 3-month U.S. Dollar LIBOR submissions were identical to the published LIBOR fix, and largely consistent with the published LIBOR fix in the other tenors.”11 This was the case even though “[d]uring this 10-month period there were significant disruptions in the financial markets, affecting individual financial institutions in different ways.”12

10 Financial Services Authority, Final Notice to UBS AG ¶ 124 (Dec. 19, 2012) (“UBS FSA”) (emphasis added).
11 UBS SOF ¶ 122 (emphasis added0.

• The empirical evidence shows that Defendants conspired to suppress USD LIBORs in a pack: they submitted LIBOR rates at similarly suppressed levels, which they could not have done without colluding because their submissions diverged dramatically and in unpredictable ways from benchmark rates that tracked market fundamentals.

• On February 11, 2013, during testimony before the Parliamentary Commission on Banking Standards, Johnny Cameron, the former Chairman of Global Banking and Markets at RBS Group, characterized the LIBOR manipulation efforts as a cartel of people across a number of banks who felt they could fix it.13

12 UBS SOF ¶ 123.

• On April 12, 2013, the DOJ charged RBS with one count of “price fixing” in violation of Section 1 of the Sherman Act. RBS admitted that it was responsible for the acts of its employees charged in the Information, which alleged that, from at least as early as 2007 through at least 2010, employees “engaged in a combination and conspiracy in unreasonable restraint of interstate and foreign commerce… the substantial terms of which were to fix the price of Yen LIBOR-based derivative products by fixing Yen LIBOR, a key price component of the price thereof, on certain occasions.” Documents show that RBS colluded with other defendants in this price-fixing conspiracy.

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