In a charge that is likely to gain a lot of attention due to the nature and the complexity involved, two managers at French bank Société Générale were indicted for being involved in a scheme to manipulate the London Interbank Offered Rate (LIBOR) which is a key benchmark that is used in millions of transactions worldwide affecting trillions of dollars of funds.
Those who were charged are Danielle Sindzingre, 54, and Muriel Bescond, 49. Ms Sindzingre worked as the Global Head of Treasury while Ms Bescond was the Head of Treasury in Paris and they were charged in a US court on 5 counts including conspiring to transmit incorrect reports that is likely to affect the LIBOR and also transmitting the same as well.
LIBOR affected due to Inaccurate Reports
The indictment says that between May 2010 and October 2011, the managers instructed their subordinates to submit false reports that said that the bank was able to borrow funds at lower rates than what they were actually borrowing it for and this lead to incorrect calculations in the LIBOR rate for the US dollar as the four top and four bottom submissions from the various banks are ignored.
This affected the calculation of pricing in futures contracts including that of the EuroDollar, swaps and other financial products which affected $170 million worth of financial products during that period.
Assistant Chief Carol Sipperly and Trial Attorneys Gary A. Winters and Timothy A. Duree of the Fraud Section of the Justice Department’s Criminal Division, and Assistant U.S. Attorney Matthew Amatruda of the U.S. Attorney’s Office for the Eastern District of New York are prosecuting the case. The case is being handled by the FBI.
This is an indictment which is an allegation and all the defendants are assumed to be innocent until the charges are proven. The complexity involved in this scheme is a hint of the possibilities that exist in the financial system to subvert the system and how it is important for everyone involved to be vigilant and alert all the time.