Whistleblower gets USD 200 mio. award for tip on Libor misconduct

A whistleblower whose information helped U.S. and U.K. regulators to investigate manipulation of global interest-rate benchmarks by financial institutions was awarded nearly USD 200 mio. (about CHF 180 mio.) for his involvement in uncovering the so-called Libor scandal. The pay-out is the largest ever by the U.S. Commodity Futures Trading Commission (CFTC), which along with the U.S. Department of Justice (DOJ) and the U.K. Financial Conduct Authority (FCA) settled enforcement actions against the bank in 2015.

The CFTC’s announcement didn’t name the bank or the case, but the reward is related to manipulations of several international financial institutions in the so-called Libor scandal, according to people familiar with the matter. Employees of these institutions had begun manipulating the London Interbank Offered Rate (Libor), a rate calculated daily that was the basis for trading in countless financial market products, more than ten years ago. In doing so, they managed to take advantage of customers and other traders and rake in billions in profits. As a consequence of the scandal, the regulatory authorities decided to replace Libor with other reference interest rates.

The lawyer of the whistleblower, who has not been named, explained that his client had provided documents, receipts and other evidence on a large scale to the responsible supervisory offices in the USA and Great Britain. These would have been made a significant contribution in revealing the collusions in 2012. The authorities eventually imposed fines totalling more than USD 9 bio. on a number of international financial institutions. An award of almost USD 200 mio. has never been seen before. The previous record was USD 114 mio as commentators emphasise.

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