During the past year, the Antitrust Division, working closely with the Criminal Division, FBI, and enforcers from the United States and across the world, secured the largest penalty to-date in the ongoing LIBOR investigation and criminal pleas from some of the world’s largest and most influential banks in the ongoing Foreign Exchange investigation.
Over the last several years, the Antitrust and Criminal Divisions and the FBI have been investigating possible collusion activity intended to manipulate the price of U.S. dollars and euros exchanges in the FX spot market. The dollar-euro spot market is one of the world’s largest financial markets. On a daily basis, there are approximately $500 billion worth of dollars and euros traded in this market. Trading on the dollar-euro spot market is five times larger than all U.S. stock exchanges combined.
On May 20, 2015, when four major Wall Street banks—Citicorp, JPMorgan Chase & Co., Barclays PLC, and The Royal Bank of Scotland plc—agreed to plead guilty to parent-level Sherman Act felony charges for conspiring to manipulate the dollar-euro spot market. A fifth bank—UBS AG—was found to have breached its nonprosecution agreement related to LIBOR misconduct, agreed to plead guilty to manipulating LIBOR charges brought by the Criminal Division, and agreed to pay more than $200 million in additional criminal fines.
The fines paid by Citicorp, Barclays, and JPMorgan are the three largest fines ever imposed for a criminal violation of the Sherman Act.
In announcing these guilty pleas and criminal fines, Attorney General Loretta Lynch called the parent-level guilty pleas “historic resolutions” and noted that “[t]he penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct.” Attorney General Lynch also observed that the collective efforts of the Antitrust and Criminal Divisions and the FBI—as well as those of numerous domestic and foreign regulators conducting similar investigations—“serve[s] as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers.”
The LIBOR investigation reached its own milestone on April 23, 2015, when DB Group Services (UK) Limited, a wholly owned subsidiary of Deutsche Bank AG, agreed to plead guilty to wire fraud for its role in manipulating LIBOR, a leading interest rate benchmark used in financial products and transactions around the world. That same day, the parent bank entered into a deferred prosecution agreement and admitted its role in both manipulating U.S. dollar LIBOR and participating in a price-fixing conspiracy to rig yen LIBOR contributions with other banks.
Together, Deutsche Bank and its UK subsidiary paid $775 million in criminal penalties to the Justice Department. Deutsche Bank was the sixth major financial institution to admit its misconduct in the LIBOR investigation, and its resolution represents the investigation’s largest penalty to date.
The Antitrust and Criminal Divisions have worked together to hold individual bank employees accountable for their role in corporate wrongdoing. On November 5, 2015, a Federal jury in New York convicted two former Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”) derivative traders for manipulating LIBOR for the U.S. dollar and the yen.
After a four-week trial, the jury found Anthony Allen—Rabobank’s former global head of liquidity and finance and the manager of the company’s money market desk in London—and Anthony Conti—a former Rabobank LIBOR submitter in England—guilty of conspiring to commit wire and bank fraud, as well as substantive wire fraud.
In addition to Messrs. Allen and Conti, three other former Rabobank employees—Paul Robson, Lee Stewart, and Takayuki Yagami—have pled guilty to one count of conspiracy in connection with their roles in the scheme. Two other former Rabobank employees, Tetsuya Motomura and Paul Thompson, have also been charged.
Rabobank previously entered into a deferred prosecution agreement with the Department on October 29, 2013 and agreed to pay a $325 million penalty to resolve violations arising from its LIBOR submissions.
Since 2009, the Division has convicted 129 individuals and obtained more than $3.86 billion in corporate fines, penalties, and settlements from the prosecution of collusion and fraud affecting currency markets, municipal bond investment instruments, benchmark interest rates, and real estate and tax lien auctions.