Citigroup Inc. has agreed to pay $425 million to settle civil charges that it tried to manipulate interest rate benchmarks. In announcing the settlement, the Commodities Futures Trading Commission said Citigroup affiliates also made false reports in connection with ISDAFIX benchmark rates and dollar Libor rates during the financial crisis to protect its reputation. The CFTC accused Citigroup of trying to manipulate the benchmarks by certain traders putting in false data to benefit their own trading positions. The various actions occurred between 2007 and 2012.
With the Citigroup settlement, the CFTC said it has imposed more than $5 billion in penalties in 17 actions against banks and brokers for manipulating benchmarks for interest rates and foreign exchange. The settlement is the latest in a series of ongoing international probes of global banks. Citibank has faced at least one larger regulatory settlement. In 2014, Citi agreed to pay the U.S. Justice Department $7 billion to resolve claims it misled investors about the quality of mortgage-backed securities. The benchmarks included the U.S. dollar ISDAFIX for fixed interest rate swaps, the Yen Libor and the Euroyen Tibor.
Banks use the London Interbank Offered Rate (Libor) and Tokyo Interbank Offered Rate (Tibor) to set the cost of borrowing from each other. Libor is often used to set rates on such things as credit cards and mortgages.
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