US District Court Slaps RBS With $50 Million Fine For Interest Rate Manipulation

The Royal Bank of Scotland (RBS) has been hit with a $50 million fine by the US District Court of Connecticut for its role in the interest rate manipulation of Japanese securities also known as Libor Libor Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Libor stands for London Inter-bank offered rate. It is an industry-specific term which most of us would never have heard of until the "Libor scandal" became popularized in 2012. Libor is considered to be one of the most important interest rates in finance, upon which trillions of financial contracts rest. The Libor rate effects over $800,000,000,000,000 in financial deals. Banks simply cannot lend money to one another whenever they like as there is a system in place. Every day a group of leading Read this Term, via an RBS statement.

The fine is part of a larger pool of more than $600 million in penalties dolled out for fraudulent handling of Japanese securities by some of the world’s leading banks. The bank’s subsidiary, RBS Securities Japan Limited accepted a plea agreement last year for its involvement, however, just recently a federal judge has approved the staunch penalty.

The lingering case spawned a series of investigations – some still ongoing – however, it was the subsidiary RBS Security Japan Limited that effectively pleaded guilty to wire fraud, coupled with its role in Libor. In particular, the focus was the JPY interbank offered rate, a mechanism by which global banks lend money amongst each other forming the basis for trillions worth of contracts annually.

The $50 million fine is the latest of the $612 million in sanctioned penalties by American and British regulators and monetary authorities. According to court papers released by the Federal judge, 20 RBS traders were convicted of wrongdoing. RBS has since announced in a statement that the prosecutors have been either disciplined internally or released from the company outright for their indiscretions.

Justice Department Lauds LIBOR Investigation, More Fines In Sight?

According to Acting Assistant Attorney General, Mythili Raman," Today's sentencing of RBS is an important reminder of the significant consequences facing banks that deliberately manipulate financial benchmark rates, and it represents one of the numerous enforcement actions taken by the Justice Department in our ongoing LIBOR investigation."

The Connecticut resolution also called for the adoption of larger oversight and internal Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term and regulatory measures aimed at allaying any potential future misconduct and fraud. A subsequent statement by Raman added, “RBS provided extensive and highly valuable cooperation during the investigation.”