Rabobank

Securities Firm News: Rabobank NA to Pay Almost $369M After Pleading Guilty to Felony Conspiracy, Alabama Supreme Court Says Lawsuit Against Sterne Agee Can Proceed, and Maryland Wealth Management Firm is Accused of Fraud

Published on: February 9, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Rabobank NA Admits to Anti-Money Laundering Deficiencies, Will Pay Nearly $369M

Rabobank National Association, a subsidiary of Rabobank UA (RABO), has pleaded guilty to felony conspiracy for obstructing the Department of the Treasury’s Office of the Comptroller of the Currency’s examination of the bank while hiding that its anti-money laundering program had certain deficiencies. Now, the firm will pay almost $369M for not preventing illicit funds from going through the bank.

With its guilty plea, Rabobank is admitting that it conspired with a number of its ex-executives to try defrauding the US by “unlawfully impeding” the OCC’s efforts to regulate the California subsidiary, including obstruction of an OCC examination of the bank’s branches throughout the state. Rabobank acknowledged that because of deficiencies in its AML program, the bank made it possible for hundreds of millions of dollars from Mexico and other places to be deposited in its rural bank branches and then allowed to money to move via checks, wire transfers, and withdrawals. Federal regulators were not notified even though they should have been.

During a 2012 OCC examination, Rabobank executives purposely tried to “hide and minimize” its AML program deficiencies so as to avoid new sanctions. Rabobank was already sanctioned in ’06 and ’08 for failures that were “nearly identical” to the ones at issue now. Late last year, ex-Rabobank VP George Martin reached a deferred prosecution deal with the US government for aiding and abetting the bank in not having an AML program that met Bank Secrecy Act requirements.

FDIC’s Libor Rigging Lawsuit Against Deutsche Bank, UBS, Royal Bank of Scotland, and Others in the UK Accuses Defendant Banks of Lowballing Benchmark Interest Rate Figures

Published on: August 31, 2017 | by Shepherd Smith Edwards & Kantas, LLP

In the UK, the US government is suing several banks over Libor rigging allegations in High Court. The defendants in the London Interbank Offered Rate (Libor) manipulation lawsuit include Deutsche Bank (DB), Barclays (BARC), Royal Bank of Scotland (RBS), Lloyds Banking Group, UBS (UBS), Rabobank (RABO), and several other banks, in addition to the British Bankers Association.

According to the Federal Deposit Insurance Corporation’s claim, the banks would engage in lowballing by turning in estimates that were artificially low when participating in the daily process to set the Libor rate. The US agency said that it is suing for 39 US banks, which were once collectively valued at over $400M, that failed after they depended on the US dollar denominated-Libor variant for derivative and other transactions. FDIC contends that the inaccurate figures submitted by the European banks caused the US banks to sustain massive losses.

It believes that if the Libor rate had been set honestly, the benchmark’s rate would would have been higher and these banks would have achieved higher prices and larger returns on different mortgages, loans, options, swaps, and other Libor-tied agreements. Instead, the plaintiffs allegedly colluded together to keep borrowing rates down to make it appear as if the banks were in more robust financial health than what was actual. The FDIC argued that the joint efforts of the banks and the British Bankers Association resulted in the “sustained and material suppression of Libor” from August 2007 through at least 2009.

Libor to Be Phased Out in 2021

Published on: July 27, 2017 | by Shepherd Smith Edwards & Kantas, LLP

According to Andrew Bailey, the head of the UK Financial Conduct Authority, the London interbank offered rate (Libor) will be scrapped by the end of 2021. The British regulator intends to phase out the key interest benchmark, which is the underlying rate for over $350 trillion dollars of financial products, and bring in new measures that are more connected with the lending market.

One potential replacement reportedly under consideration is contracts with the Sterling Overnight Index Average, also known as Sonio. This alternative derivatives reference rate is almost free of risks and deals with overnight funding rates in the unsecured sterling market. Another option being explored is the Treasuries repo rate, which is tied to the cost of borrowing money that has been secured against US government debt.

Libor is set by 20 banks that every day turn in the rates at which they are ready to lend to other banks at different maturities and in five currencies over certain time periods. It has a global impact. Libor is used for setting the price that businesses should pay for loans and people should pay for mortgages. It also is a factor in derivative pricing.

Four Former Barclays Traders Get Prison Terms for Libor Rigging

Published on: July 9, 2016 | by Shepherd Smith Edwards & Kantas, LLP

Four ex-Barclays (BCS) bankers who were convicted for conspiring to manipulate global benchmark interest rates have been sentenced to time behind bars for their crimes. The defendants and their prison terms are: Jay Merchant, for six-and-a-half years; Jonathan Mathew for four years; Peter Johnson for four years, and Alex Pabon for two years and nine months.

While Merchant, Mathew, and Pabon were convicted of their crimes, Johnson, a former senior dollar Libor submitter and the ex-head of dollar cash trading, pleaded guilty in the case against him in 2014. They all were charged with conspiracy to defraud involving Libor rigging to benefit their banks and one another as they defrauded others.

The judge who presided over the former Barclays traders’ case accused them of abusing their position, committing the offenses more than once over a significant period of time, and compromising the banking industry. All of the men will serve half their prison terms before being released on license.

The manipulation of Libor, the London interbank offered rate, and other benchmark interest rates led to a global probe that has resulted in hefty fines for the firms whose brokers colluded together to rig rates. In 2012, Barclays admitted that it let its derivatives traders rig Libor rates. The bank paid $450M to authorities in the US and Europe to settle charges. Collectively, the banks accused in the Libor manipulation scandal have paid billions of dollars in penalties. There have been at least 13 convictions.

Two-Ex Rabobank Bankers Get Prison Sentences Over Libor Involvement

Published on: March 17, 2016 | by Shepherd Smith Edwards & Kantas, LLP

A U.S. district court judge has sentenced two former Rabobank bankers to time in prison for their involvement in rigging the London interbank offered rate. Anthony Allen received a two-year prison term and Anthony Conti was sentenced to a year and a day.

Conti and Allen were convicted by a jury in last year. Prosecutors accused them of conspiring to turn in fake rates for calculating Libor, which is based on submissions from over a dozen banks. They believed the two bankers sought to help other Rabobank traders make more money on trades. Meantime, their defense lawyers contended that the men’s submission to Libor were made in good faith.

Allen was the worldwide head of liquidity and finance at Rabobank and the supervisor of Conti, who was a senior money markets trader who made submissions to Libor daily. Libor plays a key role in determining the borrowing costs for trillions of dollars in loans.

The U.S. Justice Department has criminally charged 11 other individuals in its probe into Libor rigging. Four of them, three of them who were traders at Rabobank, have entered guilty pleas.