August 8, 2016
Carson City, NV – Today, Nevada Attorney General Adam Paul Laxalt announced a multi-state settlement with Barclays Bank PLC and Barclays Capital Inc. for fraudulent and anti-competitive conduct involving the manipulation of the London Interbank Offered Rate, or LIBOR. LIBOR is an interest rate that has a widespread impact on global markets and consumers, including being used as a benchmark rate for mortgages. In addition to Nevada, 43 other state and territorial attorneys general participated in a multi-state working group to reach this settlement.
The LIBOR is set daily by rate submissions received from a panel of several banks, including Barclays. The basis for any particular rate submission to LIBOR is generally meant to reflect each bank’s assessment of the rates at which a particular bank can borrow unsecured interbank funds. An investigation into Barclays’ conduct concerning LIBOR rate submissions revealed that Barclays manipulated LIBOR through two different types of fraudulent and anti-competitive conduct. First, during the financial crisis between roughly 2007 and 2009, Barclays attempted to conceal from consumers that they were facing financial difficulty and needed to pay a higher rate than some of its peers to borrow money. In order to do so, managers frequently instructed internal LIBOR submitters to lower Barclay’s settings. Second, at various times from 2005 to at least 2009, Barclays’ traders asked their own LIBOR submitters to change their settings in order to manipulate trading positions. Submitters often agreed to the requests. At times, these requests came from outside traders, and Barclays traders agreed to pass them along to their own submitters, thus conspiring with other banks.
“This latest settlement with Barclays bank is another example of Nevada’s determination to investigate and prosecute anti-competitive conduct and protect free market competition,” said Laxalt. “Government entities and not-for-profit organizations in Nevada and throughout the country were defrauded of millions of dollars when they unknowingly entered into swaps and other investments with Barclays and other banks who manipulated LIBOR. As a result of this settlement and Barclays’ cooperation, Wall Street now knows that the Nevada Attorney General’s Office is watching to ensure future compliance.”
Governmental and not-for-profit entities with LIBOR-linked swaps and other investment contracts with Barclays will be notified if they are eligible to receive restitution from a settlement fund of $93.35 million. The balance of the settlement fund will be used to pay costs and expenses of the investigation and for other uses consistent with state law.
In addition to Nevada, participants in the settlement include: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Senior Deputy Attorney Generals Lucas Tucker and Brian Armstrong of the Attorney General’s Bureau of Consumer Protection represented Nevada in this settlement.