On October 29, the CFTC issued an order settling charges that the agency brought against Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”). Rabobank settled charges of false reporting and attempted manipulation of the LIBOR for U.S. Dollar, Yen, and Sterling, and of the Euro Interbank Offered Rate (“Euribor”) as well as successful manipulation of Yen LIBOR. In addition, the agency settled charges against the bank for aiding and abetting the attempts of other banks’ derivatives traders to manipulate the Yen LIBOR and Euribor.
Rabobank was required to pay a penalty of $475 million, cease and desist from violations of the Commodity Exchange Act, and adhere to specific undertakings to ensure the integrity of its future LIBOR and other benchmark interest rate submissions.
CFTC Chairman Gary Gensler expressed concern that, despite the settlement, problems with LIBOR could persist. “I wish I could say that this won’t happen again, but I can’t. LIBOR and Euribor are not sufficiently anchored in observable transactions. Thus, they are basically more akin to fiction than fact. That’s the fundamental challenge so sharply revealed by Rabobank and our prior cases . . . Though addressing governance and conflicts of interest regarding benchmarks is critical, that will not solve the lack of transactions in the market underlying these benchmarks.”