The Need for Criminal Prosecutions to Redress the Bank Excesses of the LIBOR Scandal

Enforcement of Regulations with the Resources to Seek Criminal Penalties
  • Regulators must seek jail time to deter future criminal activity, especially after such egregious fraud as misquoting the reference lending rate for $800 Trillion of contracts
Occupy the SEC ( is pleased to see that the CFTC has acted upon Barclays’ extensive and long-term practice of fraudulent pricing of LIBOR and EURIBOR.  The CFTC’s $200 million dollar settlement with Barclays, the Department of Justice’s penalty of $160 million and the United Kingdom’s FSA settlement of £59.5 million are significant enforcement achievements.  Barclays’ mispricing of reference rates has affected entire economies throughout the globe, given that businesses of all sizes routinely borrow on reference rates tied to LIBOR and Euribor.  This arbitrary and self-serving rate settings affected corporate customers, floating rate lenders, derivative counterparties and ultimately any entity or person doing business with companies borrowing at LIBOR.  There is a strong argument to be made that while $452 million of total settlements that Barclays agreed to is not an insignificant amount, it pales in comparison to the damages caused by incorrect pricing on HUNDREDS of TRILLIONS of dollars of financial contracts.  More recent developments have made clear that criminal manipulation of LIBOR has extended well beyond just Barclays.
Many of the banks involved in LIBOR and Euribor pricing were borrowing at prices typically significantly higher than their LIBOR and Euribor quotes during the period in question, and we have strong reason to believe that mispricing of these reference rates was rampant throughout the industry.  Accordingly, we hope the CFTC and other bank regulators do not limit their investigations to Barclays, and instead scrutinize the activities of all of the banks that participated in the setting of these reference rates.
Further, Occupy the SEC expects the regulators to pursue criminal prosecution of the individuals that participated in this fraud.  The CFTC’s press release makes clear that it knows the exact identities of the principal actors behind this criminal activity.  Occupy the SEC believes the U.S. has historically had been viewed as the strongest, fairest and most transparent financial market in the world.  The entire U.S. economy benefits from this leading position.  Yet if our regulators do not prosecute perpetrators, financial institutions will continue to act fraudulently.  Regulatory fines will be disregarded as the mere cost of doing business, and will lose their deterrent value.  When regulators fail to prosecute, individual perpetrators often walk away scot-free, free to collect their bonuses and continue engaging in similar activities at the same or another institution.
We encourage the regulators, particularly the SEC, to continue to use all the investigative and prosecutorial powers at their disposal to pursue the various securities law violations that have become apparent on an unprecedented scale during the current financial crisis.  We are particularly distressed that the SEC has not taken action to prosecute any major CFOs or CEOs for Sarbanes-Oxley violations, and look forward to the day that the SEC takes an active role in enforcing that critical piece of investor protection legislation.
Criminal traders and bankers tarnish the reputation of 99+% of financial institution employees who act according to the laws of the U.S.  If fraudulent activities are not punished with criminal convictions, opportunists will continue to abuse vulnerable institutions.  For the sake of honest bankers and the integrity of our financial markets, regulators need to set an example, remove anyone acting fraudulently and hold executives accountable where appropriate.  Otherwise, the entire industry’s reputation will be damaged and our markets will become less desirable in a highly competitive global marketplace.  Considering the importance of the financial markets to the U.S. economy from the perspectives of employment, growth and tax revenue, we believe that continuing to let criminals off the hook is an intolerable situation that must end.
Occupy the SEC is a group of concerned citizens, activists, and financial professionals with decades of collective experience working at many of the largest financial firms in the industry. Occupy the SEC filed a 325-page comment letter on the Volcker Rule NPR, which is available at

About A. Tewary

10 thoughts on “The Need for Criminal Prosecutions to Redress the Bank Excesses of the LIBOR Scandal

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  5. I am an activist and want to receive information, when your groups meet, so I might join you.

    Thank you!

    Fern Tishman

  6. It is inexcusable that there have been no criminal charges brought against any of the CEOs and other high officials of these banks. My understanding is that Mr. Obama was presented with a 2000 page report, detailing the charges, and has refused to act on it. Perhaps Mr Obama should have charges brought against him for dereliction of duty!

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  10. Thank you for helping me understand better the pursuit of justice in the Wall Street fraud.

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