Warren Allott/Agence France-Presse — Getty ImagesThe Royal Bank of Scotland said fines from its role in a rate-rigging scandal totaled $612 million.It has almost become cliché at this point.
As part of major financial cases, authorities release a flurry of incriminating e-mails, telephone conversations and instant messages that depict questionable behavior.
It has been a hallmark of the broad investigation into rate manipulation, with the past cases against Barclays and UBS. The Justice Department highlighted a number of e-mails in its civil complaint against Standard & Poor’s, including a version of the Talking Heads song, “Burning Down the House,” with a subprime motif.
On Wednesday, authorities offered similarly colorful evidence in their $612 million settlement with the Royal Bank of Scotland, portraying a scheme to influence the rate-setting process.
In some instances, traders at the bank expressed their extreme gratitude to colleagues who helped report false rates.
On May 14, 2009, one trader of Swiss Francs told the rate submitter “i would lvoe [sic] u forever,” for setting the rates at a certain level, according to the complaint by the Commodity Futures Trading Commission. Later, the trader added “if u did that i would come over there and make love to you.”
The conversations also included the usual array of colorful language.
On Sept. 15, 2009, a yen trader at R.B.S. contacted a colleague to request a certain rate. “Can we lower our fixings today please,” the trader said. The rate submitter agreed, responding, “make your mind up, haha, yes no probs.” The trader’s retort: “im like a whores drawers,” moving up and down.
The e-mails also detail an industry problem with the rate-setting process.
In August 2007, one senior yen trader at R.B.S. told rivals at other banks, “this libor setting is getting nutss.” A trader at one bank responded, “im puzzled as to why 3m libor fixing not coming off after the FED action.” Another noted “[UBS] is lending dolls through my currencies in 3 month do u see him doing the same in urs.”
The R.B.S. trader then mused how the process was becoming a “cartel” in certain currencies, adding “its just amazing how libor fixing can make you that much money.”
As authorities started to investigate rate manipulation, traders at R.B.S. nonetheless continued to try to influence the benchmark, albeit more covertly.
One yen trader wrote in a Bloomberg chat to a colleague: “at the moment the FED are all over us about libors.” The colleague, a senior yen trader, replied: “thats for USD?, adding “dun think anyone cares the JPY Libor.” The trader then indicated the need to take the requests offline, “not yet, I will walk it over to them.”
In a later conversation by phone, the senior yen trader apologized to a different colleague for making rate requests via Bloomberg chat, according to the C.F.T.C. release.
Senior Yen Trader: Yeah, how are you?
Primary Submitter: I’m pretty good sir. Very Good. We’re just not, we’re not allowed to have those conversations on [instant messages].
Senior Yen Trader: Oh, sorry about that. I didn’t know.