Barclays will pay $100 million in a settlement with 43 states, including New York, over charges that its Barclays Capital investment bank subsidiary manipulated benchmark interest rates, including the U.S. dollar London interbank offered rate.
The manipulation defrauded government units and businesses of “millions of dollars” when they entered into swaps and other financial contracts “without knowing that Barclays and other banks on the U.S. dollar LIBOR-setting panel were manipulating LIBOR … and, at times, colluding with other banks,” said a news release Monday from New York Attorney General Eric Schneiderman.
From 2007 to 2009, 16 banks that made submissions in U.S.-dollar LIBOR agreed to Barclays Capital's request to lower their submissions to benefit traders' positions and “to avoid the appearance that Barclays was in financial difficulty and needed to pay more than some of its competitors to borrow money,” Mr. Schneiderman said in the release.
Barclays is the first bank in the LIBOR-setting panel to settle all claims against it, Mr. Schneiderman said, adding Barclays officials cooperated with the investigation.
The entities affected by the manipulation will be notified of eligibility to restitution from a settlement fund of $93 million, Mr. Schneiderman said. The remainder of the settlement will pay for expenses of the investigation.
“Barclays is pleased to have resolved the state attorneys general investigation,” a statement from Barclays said. “We believe this settlement is in the best interests of our shareholders and clients, and allows us to continue to focus on the future and serve our clients.”