Press Release  Barclays To Pay $100 Million For Allegedly Defrauding Government And Non-Profit Entities With Manipulated Interest Rates

Boston — Barclays Bank PLC and Barclays Capital Inc. (Barclays) have agreed to pay $100 million to settle allegations that they manipulated interest rates and defrauded governmental and non-profit entities in Massachusetts and across the nation, Attorney General Maura Healey announced today.

The investigation, conducted by AG Healey and more than 40 other state attorneys general, concluded that Barclays engaged in fraudulent conduct by manipulating LIBOR (London Interbank Offered Rate) to set deflated interest rates and deceiving counterparties about LIBOR based transactions. LIBOR is calculated through submissions of interest rates by major banks across the world and has a widespread impact on global markets and consumers as many financial institutions set their own rates relative to it.

“Businesses cannot use deceptive tactics to defraud their clients for their own profit,” said AG Healey. “Through this settlement, Barclays will return the millions of dollars that they took through unfair trades after manipulating these interest rates.”

The multistate review concluded that during the financial crisis period of 2007-2009, Barclays’ managers frequently told its LIBOR submitters to lower their LIBOR rate settings in order for Barclays to appear more creditworthy than it was, and to avoid the appearance that the bank was in financial difficulty. Barclays’ LIBOR submitters allegedly complied with the instructions and suppressed LIBOR submissions during that period.

Also, the states allege that at various times from 2005 to 2007, and continuing at least into 2009, Barclays’ traders also asked Barclays’ LIBOR submitters to change their  LIBOR submissions in order to benefit their trading positions, and the submitters often agreed to the requests.

Because of these falsely-deflated rates, government entities and non-profit organizations in Massachusetts and throughout the U.S. were allegedly defrauded of millions of dollars when they entered into interest rate swaps and other investment contracts with Barclays, often causing incoming payments to be smaller than they should have been. 

Affected government and non-profit entities will be notified if they are eligible to receive restitution from a settlement fund of $93.35 million. The balance of the settlement fund will be paid to the multistate group of investigating states.

Barclays is the first of several USD-LIBOR-setting panel banks under investigation by the state attorneys general to resolve the claims against it.

The states also joining the Barclays settlement include: Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin & Wyoming. The investigation into the conduct of several other USD LIBOR-setting panel banks is ongoing.

This matter was handled in Massachusetts by Assistant Attorneys General Madonna Cournoyer and Aaron Lamb, with assistance from Insurance and Financial Services Division staff members Diana Hooley, Brook Kellerman, and Division Chief Glenn Kaplan.  

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