Is Interest Rate Manipulation Everywhere?

Manipulation of interest rate benchmarks is all the rage these days.

The Royal Bank of Scotland (NYSE:RBS), Barclays (NYSE:BCS), and UBS (NYSE:UBS) have all settled allegations with regulators in the United States and Great Britain for rigging the London Interbank Offered Rate (Libor), which is used to price trillions of dollars worth of loans worldwide. A total of 12 banks have been implicated in that scandal.

But the Euro Interbank Offered Rate (Euribor) appeared to be too tempting to pass up as well. Euribor is a daily reference rate based on the averaged interest rates at which euro-zone banks lend unsecured funds to other banks in the euro zone.

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Five traders on Deutsche Bank’s (NYSE:DB) money market team have been suspended on suspicions of inappropriate behavior following an internal investigation into a possible manipulation of the benchmark, Reuters reported on Wednesday. A source familiar with the matter informed the publication that the investigation dates back to January, but gave no further details…
At that time, Deutsche Bank made a statement outlining its progress on an internal probe that was begun after concerns that the benchmark interest rates were being manipulated arose. “Upon discovering that certain employees acted inappropriately, we have suspended or dismissed employees, clawed back unvested compensation, and will continue to do so as we complete our investigation,” the bank said in a January statement.

The bank also said it was cooperating with regulators in their various investigations into interbank offered rate manipulations.

Earlier on Wednesday, RBS was fined $615 million to settle charges of rigging the Libor benchmark rate.

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