Wednesday, June 27, 2012

Bank Fined for Market Manipulation

Barclays Bank is fined for manipulating LIBOR.

NEW YORK (AP) -- Barclays  PLC and its subsidiaries have agreed to pay more than $400 million to settle charges that it attempted to manipulate and made false reports related to setting key global interest rates.

Isn't manipulation in preparing false reports for a profit considered fraud?  

           A deception deliberately practiced in order to secure unfair or unlawful gain.

The truth of this settlement will never be known.  Who was defrauded and for how much?  Who were the individuals who acted to commit the fraud?  Who supervised these individuals and otherwise approved the actions?

We know two things for certain:

1)      The amount of the fine is only a fraction of the gain realized by Barclays
2)      Those who were defrauded will not see a penny of this money.

Rest assured, management is holding itself accountable:

Barclays President Bob Diamond also announced he and three senior bank executives were waiving any bonus for the year as a result of the case.

In a normal world, liability for committing fraud would be personal, and more than simply forgoing a bonus.

The bank committed fraud.  To be clear, human beings with two legs committed fraud, and other human beings with two legs supervised them.  This wasn’t just a poor management decision.  It was an act with the intent to deceive in order to achieve an economic gain.  According to the AP report, the bank "attempted to manipulate" and made “false reports.”  These manipulations and false reports lead to a gain for someone and a loss for someone else.

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