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LIBOR Rigging: Citigroup Spared from DOJ Prosecution - Analyst Blog

Citigroup Inc.C , which is surrounded by numerous litigations, has recently received some reprieve. In its latest quarterly filing, the New York based banking giant stated that the Department of Justice has declined to prosecute the bank relating to the regulator's probe in London Interbank Offered Rate (LIBOR) rigging.

Per the filing, "the Department of Justice has advised Citigroup that, based on the facts and circumstances as the Department of Justice currently understands them, the Department of Justice has decided to decline prosecution with respect to LIBOR."

We believe the DOJ's move certainly bring some relief to Citigroup as the company saved huge legal expenses, which could have stemmed from the issue.

Notably in Dec 2014, Citigroup stood among the six major banks in a $2.3 billion settlement with the European Union over charges of manipulation of benchmark interest rates. The company was hit with a €70 million fine.

Libor manipulations by several banks have been detected by global authorities. It is alleged that traders at several banks have conspired jointly to manipulate the rates so as to benefit from derivatives trades while several others artificially suppressed LIBOR during the financial crisis to present secure financial health of the companies and benefit from their investments in financial products tied to LIBOR during that period.

Most recently, Deutsche Bank AG DB reached a settlement with the U.S. and British authorities, resolving a prolonged investigation over its alleged role in manipulation of the interbank offered rates benchmarks. The company was slammed with a total fine of $2.5 billion by the global authorities.

In 2012, Barclays PLC BCS had admitted to its fraudulent practices and had agreed to pay a penalty of $450 million for rigging the LIBOR. Also, during the same year, UBS Group AG UBS paid CHF 1.4 billion ($1.5 billion) to the U.S., U.K. and Swiss authorities to resolve claims of LIBOR fixing.

Separately, in its filing Citigroup also stated that the company is in discussions with the DOJ for a possible settlement related to its probe in the company's foreign exchange business. The resolution may also include a guilty plea.

Citigroup currently carries a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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