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Regulation

Citibank to pay $100 million to settle LIBOR manipulation charges

Citibank agreed to pay $100 million in a settlement with 42 states, including New York, over charges that it manipulated benchmark interest rates, including the U.S. dollar-London interbank offered rate.

The attorneys general alleged that Citibank "made millions in unjust gains when government entities and not-for-profit organizations entered ... financial contracts with Citibank without knowing that Citibank ... (was) manipulating LIBOR submissions," said a news release Friday from New York Attorney General Barbara D. Underwood's office.

Citibank is alleged to have misrepresented the integrity of the LIBOR benchmark "by concealing, misrepresenting, and failing to disclose" that it has occasionally made U.S.-dollar LIBOR submissions "to avoid negative publicity and protect" the bank's reputation, the release said. In addition, Citibank's U.S. dollar-LIBOR submitters were also alleged to have periodically asked Citibank personnel to avoid offering higher rates than its U.S. dollar-LIBOR submissions.

The entities affected by the manipulation will be notified of eligibility to restitution from a settlement fund of $95 million, the release said. The remainder of the settlement will pay for expenses of the investigation.

"Today's settlement represents another significant step for Citi in resolving its legacy interbank offered rate litigation," Citi spokeswoman Danielle Romero-Apsilos said in a statement. "Citi has adopted industrywide reforms related to participation in interbank offered rates and other benchmark rates and made substantial investments in its systems, controls and monitoring processes to better guard against inappropriate behavior. Our greatest priority remains ensuring that we conduct business in keeping with the highest ethical standards."

Citibank is the third bank to resolve U.S. dollar-LIBOR claims following investigation by state attorneys general. With the Citibank settlement, the attorneys general have now collected a total of $420 million. Deutsche Bank agreed to pay $220 million in October 2017, and Barclays Bank and Barclays Capital agreed to pay $100 million in August 2016.

The settlement agreement and accompanying statement of facts is on the New York attorney general's website.