RBS pays $612M for its role in rate scandal

Kevin G. Hall / McClatchy Newspapers /

WASHINGTON — U.S. and British regulators announced a $612 million settlement Wednesday with Royal Bank of Scotland, with the global bank acknowledging that it had manipulated key benchmark interest rates to benefit its trading positions in unregulated markets.

The action against the bank by the U.S. Commodity Futures Trading Commission brought the penalties it’s levied against global banks in the ongoing interest rate scandal to $1.2 billion. Royal Bank of Scotland agreed Wednesday to pay the commission $325 million, the Justice Department $150 million and Britain’s Financial Services Authority $137.1 million. Global banks have now paid the Justice Department more than $810 million in the investigation.

As part of the settlement, the bank’s subsidiary RBS Securities Japan Limited pleaded guilty to a single charge of wire fraud with intent to defraud counterparties. The British government owns 80 percent of Royal Bank of Scotland, taking its stake in a rescue of the bank during the global financial crisis.

What made Wednesday’s settlement stand out was titillating instant-message traffic secured by the enforcement staff at the Commodity Futures Trading Commission.

In one message that involved the trading of Swiss francs, a trader seeks a manipulated rate and coos, “If u did that I would come over there and make love to you.”

The messages show brazen market fixing and no remorse over manipulative behavior in financial markets. They also show that the bank had traders and employees who submitted its interest rates working together on the same desk. “That’s a smack in the face of market integrity,” said David Meister, the commission’s director of enforcement.

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