Below is a recent article published by securities lawyer Jake Zamansky on Forbes.com (2.7.13)
What in the world is going on here? The Royal Bank of Scotland (”RBS”) actually made the scoundrels who engaged in Libor shenanigans pay for what they did!RBS, the latest bank embroiled in the Libor rate-fixing scandal, agreed to pay UK and US regulators a whopping $612 million for their role in the rate rigging. And for the third time-UBS and Barclays were the forerunners-law enforcement required a target’s subsidiary to plead guilty to felony wire fraud. Who knows, maybe someday an actual Wall Street honcho will go to jail.
Colorful e-mails by RBS traders provided “smoking gun” evidence of the bank’s role in the scandal. One colorful example, a trader in an e-mail asked for a lower submission of Libor, then told the submitter that he was “like a whore’s drawers” in acknowledging he often passed on requests for interest rates that went up and down.
Another RBS trader said to a rate submitter “I would love you forever” for setting the rates at a certain level and the trader later added “if u did that I would come over there and make love to you.” Another RBS trader mused how the rate-rigging process was becoming a “cartel” in certain currencies, adding that “it’s just amazing how Libor fixing can make you that much money.” (On a side note, isn’t it always the emails?! Traders seem to have a limitless capacity for unintentional comedy in their emails, instant messages and texts. I suppose we-and the Feds-should be grateful for their lack of discretion.)
What is really amazing about the RBS settlement is that, for once, a bank is making the actual traders who committed the fraud pay. According to a Reuters report by Matt Scuffham and Kirstin Ridley, RBS fired or disciplined all twenty-one of the traders who were involved in the Libor scandal and cut £300 million from its bonus pool, including clawing back awards from previous years, to pay the US fines. The UK penalty will be donated to charitable causes, according to the bank.
The Scottish bank’s treatment differs radically from the way US banks such as Goldman Sachs have handled their scandals. When Goldman paid a record $550 million to settle the case against it for the Abacus CDO mess, in which the firm bet against its own clients, not a penny of the $550 million came out of the pockets of the well-heeled bankers at Goldman. Instead, as usual, it was the shareholders who took the hit. Citigroup, Merrill Lynch and other US banks also have tapped shareholders rather than the actual culprits for payment of fraud fines. I guess they never got the memo about where the buck is supposed to stop!
What a remarkably fresh idea coming out of Scotland: make the culprits pay for their misdeeds. This could just be the best idea to come out of Scotland since its renowned whiskey.
Disclaimer: Zamansky LLC (www.zamansky.com) are securities attorneys representing investors in federal and state litigation and arbitration against financial institutions, including RBS, UBS, Citigroup, JPMorgan Chase, Barclays, Deutschebank, and other banks implicated in the Libor-rigging scandal.
Read full article by securities lawyer Jake Zamansky on Forbes.com