US Authorities Fine Société Générale $475 million for Libor Rigging

French bank Société Générale has reached a $475 million ‎settlement in a class action suit alleging that its managers ‎conspired to manipulate a global benchmark interest rate known ‎as Libor, according to a CTFC filing.‎

The settlement made public on Monday resolves antitrust ‎and other claims against the bank which was pleased to ‎have resolved the agency's investigations into legacy ‎activities, according to a Société Générale spokesman.‎

The indictment states that between May 2010 through ‎mid-2012, certain members of SocGen’s executive management, including the ‎CFO, head of investment banking and Treasury ‎managers reported false lower rates that were used to set the Euro and ‎U.S. dollar Libor.‎

According to the indictment, the scheme aimed to protect the lender’s ‎reputation after outside analysts drew attention to higher-than-average interest rates Société Générale had been reporting.‎

The documents detailed how the bank was able to borrow ‎funds at lower rates than was justified. The actions ‎allegedly led to incorrect calculations in the LIBOR rate ‎for the US dollar as the four top, and four bottom ‎submissions from the various banks were ignored in its ‎calculation.‎

The rates affected the calculation of pricing in futures ‎contracts, including that of the EuroDollar, various Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term, ‎and other financial products affecting $170 million worth ‎of financial products during the period.‎

Managers concerned as false reports continue

The indictment said that in about June 2010, the bank’s managers became ‎concerned that the false reports could catch the attention of financial ‎regulators, and suggested treasury executives to begin to increase ‎the reported rates to match the actual borrowing rate. ‎ Nonetheless, the false U.S. ‎Dollar LIBOR submissions continued until July 2012 while fabricated Euro LIBOR ‎and Euribor submissions were in place until July 2010.‎

The CFTC’s statement further explains: “Members of Société Générale’s Treasury Desks ‎expressed discomfort and concern about Société Générale’s submission ‎practices. “We have increased our market funding levels without moving our ‎LIBOR contribution I think we are leaving ourselves exposed to a possible ‎claim of market manipulation … I am extremely uncomfortable with this ‎situation.” Certain members of executive management were informed that ‎submissions did not match what the Bank was paying in the market, being told ‎at one point, “we remain in breach,” “we’re very far away from reality,” and ‎‎“we’re in cloud cuckoo land with our contributions.”

Financial watchdogs across the globe have been probing ‎banks’ rigging of Libor and similar benchmarks that are ‎used to indicate interest Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term for several financial ‎products. The investigations centered around an alleged ‎plot among major banks to manipulate Libor to benefit ‎their own trading positions.‎

German banking giant Deutsche Bank and its UK ‎subsidiary were fined last year a record a $775 million for ‎rigging interest rates in a multi-bank conspiracy that ‎undermined global financial markets.‎