Societe Generale Deferred Prosecution Agreement Libor

Societe Generale Deferred Prosecution Agreement LIBOR: What You Need to Know

In recent years, the banking industry has come under increased scrutiny for its role in manipulating global benchmark interest rates, including the London Interbank Offered Rate (LIBOR). One of the institutions that has faced legal action for its involvement in this scandal is Societe Generale.

In 2018, Societe Generale reached a deferred prosecution agreement with the U.S. Department of Justice to settle allegations of manipulating LIBOR. Here`s what you need to know about this case and its implications for the banking industry.

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a benchmark interest rate that is used as a reference for a wide range of financial products, including loans, mortgages, and derivatives. It is calculated based on the average interest rates that a panel of banks reports it would pay for borrowing funds from other banks.

Why is LIBOR important?

LIBOR is one of the most widely used benchmark interest rates in the financial industry, and its value affects the cost of borrowing for millions of consumers and businesses around the world. As a result, any manipulation of LIBOR can have significant consequences for the global economy.

What did Societe Generale do?

According to the U.S. Department of Justice, Societe Generale engaged in “widespread manipulative conduct” related to its submissions for the calculation of LIBOR. Specifically, the bank was accused of submitting false information to manipulate the rate in a way that benefited its trading positions.

What was the result of the investigation?

In 2018, Societe Generale reached a deferred prosecution agreement with the U.S. Department of Justice, under which the bank agreed to pay a $275 million penalty and to cooperate with ongoing investigations into LIBOR manipulation. The agreement also required the bank to implement enhanced compliance and internal control measures to prevent future violations.

What does this mean for the banking industry?

The Societe Generale case is just one of many examples of the legal action that has been taken against banks for their role in manipulating benchmark interest rates. This has led to increased scrutiny of the banking industry`s practices and a greater focus on transparency and accountability in financial markets. Going forward, it is likely that regulators will continue to monitor the industry closely and take action against any instances of misconduct.

As consumers and businesses, it is important to be aware of the role that benchmark interest rates like LIBOR play in the financial industry. By understanding how these rates are calculated and how they can be manipulated, we can better protect ourselves from the potential consequences of misconduct by financial institutions.