Former Rabobank Trader Pleads Guilty of LIBOR Manipulation

Former senior derivatives trader at the London desk of Dutch Rabobank, Lee Stewart, pleaded guilty in the U.S. federal court

Rabobank Headquarters (Photo: Bloomberg)
Rabobank Headquarters (Photo: Bloomberg)

Former senior derivatives trader at the London desk of Dutch Rabobank, Lee Stewart, pleaded guilty in the U.S. federal court related to charges accusing him of participating in manipulation of the U.S. dollar (USD) and the Japanese yen London InterBank Offered Rate (LIBOR).

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The benchmarks have been a focus of global regulatory scrutiny after evidence of manipulation by major banks prompted huge fines for global financial institutions.

Mr. Stewart pleaded guilty to one count of conspiracy to commit wire and bank fraud.

The mechanism of calculating LIBOR rates has been based on submissions by major global banks. The financial institutions have been submitting a rate at which they themselves estimated they can get funding from other banks.

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Before the scandal related to its manipulation erupted, LIBOR has been the leading benchmark for short-term lending rates globally. The daily figures have been used for calculating the appropriate interest rates for a number of contracts, mortgages, credit cards, student loans and other consumer lending products.

Mr. Steward admitted in his guilty plea that while working at the London desk as a senior derivatives trader, he engaged in trading derivatives linked to the value of the U.S. dollar LIBOR rate.

In addition, he stated that between 2006 and 2011, he conspired with other traders at the bank to manipulate the LIBOR benchmark interest rate, from which he realized gains in the derivatives contracts mentioned above.

A total of 16 banks have been involved in the setting of the LIBOR benchmarks, after thorough investigations of their business conduct, most of the institutions were fined, with Rabobank fined close to $1 billion in 2013 by U.S. and European regulators.

A sentencing hearing is scheduled for June 9, 2017.

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