The Royal Bank of Scotland (RBS) has been hit with a $50 million fine by the US District Court of Connecticut for its role in the interest rate manipulation of Japanese securities also known as Libor, via an RBS statement.
The fine is part of a larger pool of more than $600 million in penalties dolled out for fraudulent handling of Japanese securities by some of the world’s leading banks. The bank’s subsidiary, RBS Securities Japan Limited accepted a plea agreement last year for its involvement, however, just recently a federal judge has approved the staunch penalty.
The lingering case spawned a series of investigations – some still ongoing – however, it was the subsidiary RBS Security Japan Limited that effectively pleaded guilty to wire fraud, coupled with its role in Libor. In particular, the focus was the JPY interbank offered rate, a mechanism by which global banks lend money amongst each other forming the basis for trillions worth of contracts annually.
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The $50 million fine is the latest of the $612 million in sanctioned penalties by American and British regulators and monetary authorities. According to court papers released by the Federal judge, 20 RBS traders were convicted of wrongdoing. RBS has since announced in a statement that the prosecutors have been either disciplined internally or released from the company outright for their indiscretions.
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According to Acting Assistant Attorney General, Mythili Raman,” Today’s sentencing of RBS is an important reminder of the significant consequences facing banks that deliberately manipulate financial benchmark rates, and it represents one of the numerous enforcement actions taken by the Justice Department in our ongoing LIBOR investigation.”
The Connecticut resolution also called for the adoption of larger oversight and internal compliance and regulatory measures aimed at allaying any potential future misconduct and fraud. A subsequent statement by Raman added, “RBS provided extensive and highly valuable cooperation during the investigation.”