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From Antitrust Law Daily, April 15, 2013

Charges, Deferred Prosecution Agreement in U.S. Case Against RBS Filed in Federal Court

By Jeffrey May, J.D.

The Department of Justice on Friday filed charges against Royal Bank of Scotland plc and RBS's Japanese subsidiary, RBS Securities Japan Limited, in the federal district court in Hartford, Connecticut. The charges follow a deferred prosecution agreement (DPA) with RBS—also filed with the court—which was announced on February 6 (U.S. v. Royal Bank of Scotland plc, Criminal No. 3:13-cr-00074 MPS; U.S. v. RBS Securities Japan Limited, Criminal No. 3:13-cr-00073 MPS).

The cases stem from the financial institution's involvement in a rate rigging scheme involving the London Interbank Offered Rate (LIBOR), the premier benchmark for short-term interest rates. According to U.S. and United Kingdom regulators, RBS succeeded at times in manipulating Yen and Swiss Franc LIBOR between 2006 and 2010.

RBS was the third financial institution to settle charges that it engaged in LIBOR rate setting. It was the first and only company to enter into a DPA with the Justice Department Antitrust Division.

UBS AG and Barclays plc entered into non-prosecution agreements (NPAs) with the Justice Department over their purported roles in the manipulation of global benchmark interest rates. The Antitrust Division disfavors the use of DPAs and NPAs, but utilized these tools in light of the unique circumstances of the cases, such as the fact that the conduct was undertaken in a regulated industry.

Under the DPA, RBS agreed to admit that it engaged in wire fraud with respect to the manipulation of LIBOR benchmark interest rates, and that it conspired to rig the Yen LIBOR benchmark interest rate with other banks. According to the Justice Department, the DPA requires the bank to admit and accept responsibility for its misconduct, to continue cooperating with the Justice Department's ongoing investigation, and to pay a $100 million penalty. On April 12, the DPA and a two-count criminal information in the case against RBS were filed in the federal district court in Hartford. The information alleges a violation of 18 U.S.C. Sec. 1343 (wire fraud) and Sec. 1 of the Sherman Act (price fixing).

RBS Securities Japan Limited was charged in an April 12 information with felony wire fraud (18 U.S.C. Sec. 1343), related to the manipulation of the Japanese Yen LIBOR. RBS Securities Japan agreed to plead guilty to the charge. The plea agreement was filed with the court on the same day.

Companies: Royal Bank of Scotland plc; UBS AG; Barclays plc

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