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24Aug17

Two International Bank Managers Charged in Libor Interest Rate Manipulation Scheme

Two French bank managers were indicted today for participating in a scheme to transmit false and misleading information related to the London Interbank Offered Rate (LIBOR), a global benchmark interest rate to which trillions of dollars of financial transactions are tied.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department's Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York and Assistant Director in Charge Andrew Vale of the FBI's Washington Field Office made the announcement.

"The allegations in today's indictment suggest complete and total disregard for the integrity of the financial markets and for innocent consumers and everyday people whose personal finances hinge on the interest rates they pay on various loans," said Acting Assistant Attorney General Blanco. "Cases like this demonstrate the crucial role of the Department in protecting people and their hard earned money, securing our financial markets for economic growth and prosperity, and for fighting white collar crime to protect our nation from bad actors, wherever they may reside."

"The integrity of our global financial markets relies upon each of its participants providing complete and accurate information," said Acting U.S. Attorney Rohde. "As alleged, the defendants acted in contravention of this principle and the laws designed to uphold it by causing their employer, Société Générale, to submit falsified USD LIBOR rates, which in turn effected financial transactions across markets worldwide. We will continue to vigorously root out and prosecute such crimes."

"Fraudulently manipulating the LIBOR and deceiving the financial market to affect world-wide financial transactions have far reaching consequences, and such criminal activity will not be tolerated," said Assistant Director in Charge Vale. "Today's indictment should stand as a warning that the FBI remains committed to holding those accountable who flout the law in their attempts to take advantage of international financial markets. The FBI Washington Field Office has dedicated significant time and resources, to include the expertise of special agents, forensic accountants, and analysts, to investigating these complex financial schemes, and I want to thank the tireless investigative team as well as our colleagues at the Department of Justice Criminal Division's Fraud Section and the U.S. Attorney's Office for the Eastern District of New York for their hard work."

Danielle Sindzingre, 54, and Muriel Bescond, 49, both of France, were charged in the Eastern District of New York with one count of conspiring to transmit false reports concerning market information that tends to affect a commodity and four counts of transmitting such false reports. Sindzingre and Bescond were, respectively, the Global Head of Treasury and the Head Treasury Paris at French financial institution Société Générale, S.A.

According to the indictment, LIBOR was a benchmark interest rate that was calculated for various currencies and maturities. The U.S. Dollar LIBOR was constructed by compiling submissions from leading banks around the world ("contributor panel banks"), excluding the four highest and lowest submissions, and averaging the remainder to obtain each day's LIBOR "fix." Each contributor panel bank was required under the rules of the British Bankers' Association (BBA) to submit the rate at which it believed it would be charged if it sought offers to borrow money from other banks in the London interbank market. LIBOR was used to price futures contracts, interest rate swaps and other financial products worldwide. It was also used to calculate some consumer interest rates, including certain home mortgage and credit card interest rates. In February 2009, Société Générale joined the contributor panel for U.S. Dollar LIBOR.

As alleged in the indictment, between approximately May 2010 and approximately October 2011, Sindzingre and Bescond knowingly instructed their subordinate employees at Société Générale's Paris treasury desk to submit inaccurately low LIBOR contributions in an effort to make it appear that Société Générale was able to borrow money at more favorable rates than it actually was. This was allegedly done with knowledge that the true rates at which Société Générale was borrowing money were higher than the rates it was submitting as part of the LIBOR calculation. On numerous occasions, the false information submitted at the direction of Sindzingre and Bescond altered the day's final U.S. Dollar LIBOR calculation, thus affecting all financial transactions tied to U.S. Dollar LIBOR on that day, the indictment alleges. Among the allegedly affected financial products were Eurodollar futures, a commodity that was traded on the Chicago Mercantile Exchange. In total, it is estimated that the defendants' misconduct caused over $170 million in harm to the global financial markets, according to the indictment.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI is investigating this matter. Assistant Chief Carol Sipperly and Trial Attorneys Gary A. Winters and Timothy A. Duree of the Fraud Section of the Justice Department's Criminal Division, and Assistant U.S. Attorney Matthew Amatruda of the U.S. Attorney's Office for the Eastern District of New York are prosecuting the case.

[Source: DOJ, Office of Public Affairs, Criminal Division USAO - New York, Eastern, Washington, 24Aug17]
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Corruption and Organized Crime
small logoThis document has been published on 28Aug17 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.