Tuesday, 25 September 2012

RBS Managers Said to Condone Manipulation of Libor Rates

A new article today from Bloomberg News:
Royal Bank of Scotland Group Plc managers condoned and participated in the manipulation of global interest rates, indicating that wrongdoing extended beyond the four traders the bank has fired.

In an instant-message conversation in late 2007, Jezri Mohideen, then the bank’s head of yen products in Singapore, instructed colleagues in the U.K. to lower RBS’s submission to the London interbank offered rate that day, according to two people with knowledge of the discussion. No reason was given in the message as to why he wanted a lower figure. The rate-setter agreed, submitting the number Mohideen sought, the people said.

Mohideen wasn’t alone. RBS traders and their managers routinely sought to influence the firm’s Libor submissions between 2007 and 2010 to profit from derivatives bets, according to employees, regulators and lawyers interviewed by Bloomberg News. Traders also communicated with counterparts at other firms to discuss where rates should be set, one person said.

“This kind of activity was widespread in the industry,” said David Greene, a senior partner at law firm Edwin Coe LLP in London. “A lot of the traders didn’t consider this behavior to be wrong. They took it as the practice of the trade. This is how things operated, and it seemed harmless.”

Harmless? The routine commitment of fraud and manipulation of a rate affecting anywhere between $600 trillion - with a "t" - and $1 quadrillion in derivatives bets in order to profit is harmless?

Screwing over customers with interest rates attached to the global benchmark, as well as affecting new short-term variable-rate mortgage and credit card loan applicants/recipients, swinging prices up and down as most beneficial to the banks (and detrimental to the checkbooks of those clients) is harmless?

Fraud isn't harmless. Not only does it affect millions of people by assisting in wealth confiscation, consolidation and concentration at the top (ie. the banks), but it also sets a nasty precedent to allow further violations of securities laws that, in turn, end up affecting the customer in the end - translating to lost money for clients (either on bad bets or through blatant theft) and more C-notes lining the coffers of the cartel.

For those who don't have time to read the article, a brief summary:
EDIT: Just wanted to add this quote:

"Employees at RBS, HSBC Holdings Plc (HSBA), JPMorgan Chase & Co., Citigroup Inc., Deutsche Bank AG, as well as interdealer brokers ICAP Plc and RP Martin Holdings Ltd. were involved in the conspiracy, the Canadian regulator said. Spokesmen for the firms declined to comment on the suit. Greg Scott, a spokesman for the [Canadian] Competition Bureau, wouldn’t comment about Hayes. 

Hayes worked as a trader at RBS between 2001 and 2003, according to the Financial Services Authority register. Hall and Davies left RBS in 2009, the register shows. Hall now works for Morgan Stanley in Australia, and Davies is at ICAP in London. 

Davies didn’t respond to e-mail and text messages, and Hall didn’t reply to e-mail and phone messages. Hayes couldn’t be traced through the Internet or directory assistance. 

Another former RBS trader, Philippe Moryoussef, is being investigated by regulators for leading attempts to rig the euro interbank offered rate, or Euribor, while he was at Barclays by colluding with traders at other firms, a person with knowledge of the matter said. Moryoussef left Barclays to join RBS in 2007 and worked there until 2009. He didn’t return messages sent through LinkedIn and couldn’t be contacted through directory searches in Singapore or London."
Our buddies at the morgue (JP Morgan Chase)were under investigation by here in Canada, as well. I wonder if they are part of the 11 Federal, State and International agencies/regulatory bodies that it was recently reported were investigating them, or if they are a 12th investigating body to add to that list.

As for Citigroup, I will be writing an article about some of their shady dealings in a future article.

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