LIBOR scandal: two years on

By Tom Dane

Last summer we provided an overview of the main developments in the first year of the LIBOR scandal. This note looks back at some of the key developments over the second year.

By way of very brief recap, LIBOR (the London Interbank Offered Rate) is an important benchmark interest rate used in many financial contracts. It is prepared by reference to the average of submissions provided by 16 major banks, with the upper and lower quartile of submissions excluded for calculation purposes. The submissions relate to estimated short-term inter-bank borrowing rates (rather than actual transaction data).

In June 2012, the FSA (as it then was) issued a final notice against Barclays for attempting to manipulate LIBOR. Further notices against other banks followed and it became clear that panel banks had been involved in two types of attempted manipulation…

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