Barclays 2013 Annual Report Download - page 340

Note 30: Legal, competition and regulatory matters continued
Investigations into LIBOR, ISDAfix, other Benchmarks and Foreign Exchange Rates
The Financial Conduct Authority (FCA), the US Commodity Futures Trading Commission (CFTC), the US Securities and Exchange Commission
(SEC), the US Department of Justice (DOJ) Fraud Section (DOJ-FS) and Antitrust Division (DOJ-AD), the European Commission (Commission),
the United Kingdom (UK) Serious Fraud Office (SFO), the Monetary Authority of Singapore, the Japan Financial Services Agency, the prosecutors’
office in Trani, Italy and various US state attorneys general are amongst various authorities conducting investigations (Investigations) into
submissions made by BBPLC and other financial institutions to the bodies that set or compile various financial benchmarks, such as LIBOR
and EURIBOR.
On 27 June 2012, BBPLC announced that it had reached settlements with the Financial Services Authority (FSA) (as predecessor to the FCA), the
CFTC and the DOJ-FS in relation to their Investigations and BBPLC agreed to pay total penalties of £290m, which were reflected in operating
expenses for 2012. The settlements were made by entry into a Settlement Agreement with the FSA, a Non-Prosecution Agreement (NPA) with the
DOJ-FS and a Settlement Order Agreement with the CFTC (CFTC Order). In addition, BBPLC was granted conditional leniency from the DOJ-AD in
connection with potential US antitrust law violations with respect to financial instruments that reference EURIBOR.
The terms of the Settlement Agreement with the FSA are confidential. However, the Final Notice of the FSA, which imposed a financial penalty of
£59.5m, is publicly available on the website of the FCA. This sets out the FSA’s reasoning for the penalty, references the settlement principles and
sets out the factual context and justification for the terms imposed. Summaries of the NPA and the CFTC Order are set out below. The full text of
the NPA and the CFTC Order are publicly available on the websites of the DOJ and the CFTC, respectively.
In addition to a $200m civil monetary penalty, the CFTC Order requires BBPLC to cease and desist from further violations of specified provisions
of the US Commodity Exchange Act and take specified steps to ensure the integrity and reliability of its benchmark interest rate submissions,
including LIBOR and EURIBOR, and improve related internal controls. Amongst other things, the CFTC Order requires BBPLC to:
 make its submissions based on certain specified factors, with BBPLC’s transactions being given the greatest weight, subject to certain specified
adjustments and considerations;
 implement firewalls to prevent improper communications including between traders and submitters;
 prepare and retain certain documents concerning submissions and retain relevant communications;
 implement auditing, monitoring and training measures concerning its submissions and related processes;
 make regular reports to the CFTC concerning compliance with the terms of the CFTC Order;
 use best efforts to encourage the development of rigorous standards for benchmark interest rates; and
 continue to cooperate with the CFTC’s ongoing investigation of benchmark interest rates.
As part of the NPA, BBPLC agreed to pay a $160m penalty. In addition, the DOJ agreed not to prosecute BBPLC for any crimes (except for criminal
tax violations, as to which the DOJ cannot and does not make any agreement) related to BBPLC’s submissions of benchmark interest rates,
including LIBOR and EURIBOR, contingent upon BBPLC’s satisfaction of specified obligations under the NPA. In particular, under the NPA, BBPLC
agreed for a period of two years from 26 June 2012, amongst other things, to:
 commit no US crime whatsoever;
 truthfully and completely disclose non-privileged information with respect to the activities of BBPLC, its officers and employees, and others
concerning all matters about which the DOJ inquires of it, which information can be used for any purpose, except as otherwise limited in
the NPA;
 bring to the DOJ’s attention all potentially criminal conduct by BBPLC or any of its employees that relates to fraud or violations of the laws
governing securities and commodities markets; and
 bring to the DOJ’s attention all criminal or regulatory investigations, administrative proceedings or civil actions brought by any governmental
authority in the US by or against BBPLC or its employees that alleges fraud or violations of the laws governing securities and commodities
markets.
BBPLC also agreed to cooperate with the DOJ and other government authorities in the US in connection with any investigation or prosecution
arising out of the conduct described in the NPA, which commitment shall remain in force until all such investigations and prosecutions are
concluded. BBPLC also continues to cooperate with the other ongoing investigations.
Following the settlements announced in June 2012, 31 US state attorneys general commenced their own investigations into LIBOR, EURIBOR and
the Tokyo Interbank Offered Rate. The New York Attorney General, on behalf of this coalition of attorneys general, issued a subpoena in July 2012
to BBPLC (and subpoenas to a number of other banks) to produce wide-ranging information and has since issued additional information requests
to BBPLC for both documents and transactional data. BBPLC is responding to these requests on a rolling basis. In addition, following the
settlements the SFO announced in July 2012 that it had decided to investigate the LIBOR matter, in respect of which BBPLC has received and
continues to respond to requests for information.
The Commission has also been conducting investigations into the manipulation of, among other things, EURIBOR. On 4 December 2013, the
Commission announced that it has reached a settlement with the Group and a number of other banks in relation to anti-competitive conduct
concerning EURIBOR. The Group had voluntarily reported the EURIBOR conduct to the Commission and cooperated fully with the Commission’s
investigation. In recognition of this cooperation, the Group was granted full immunity from the financial penalties that would otherwise
have applied.
The CFTC and the FCA are also conducting separate investigations into historical practices with respect to ISDAfix, amongst other benchmarks.
BBPLC has received and continues to respond to subpoenas and requests for information.
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338 Barclays PLC Annual Report 2013
Notes to the financial statements
For the year ended 31 December 2013 continued