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February 7, 2013

Rate-fixing scandal rocks three continents

The fallout from the interest rate manipulation scandal hit three continents on Wednesday as Royal Bank of Scotland paid £390m ($612m) and admitted criminal price-fixing charges over Libor-rigging. A series of lurid emails cited in the settlement laid bare a culture where employees would readily alter rates in exchange for steak dinners.

The plea bargain with RBS – which is 82 per cent owned by UK taxpayers – was struck as Deutsche Bank suspended five employees on Wednesday after an investigation into the euro-equivalent of Libor. In a further expansion of the scandal a former Japanese trader accused banks that make submissions to the Tokyo rate of operating a “cartel” to profit off home loans.

Japan became a particular focus for scrutiny after RBS’s Tokyo subsidiary pleaded guilty to one charge of wire fraud and agreed to pay the US Department of Justice $50m of the bank’s total fine.

RBS’s admission of price-fixing came in a deferred prosecution agreement with the DoJ as part of a settlement with the UK Financial Services Authority and the US Commodity Futures Trading Commission.”

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Read full Financial Times article here 

 
 
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