Barclays traders rigged LIBOR — $450M in fines, a $350T benchmark exposed

The London Inter-bank Offered Rate (LIBOR) is the interest rate benchmark that underpins approximately $350 trillion in derivatives and financial contracts worldwide. For years, traders at Barclays and other major banks submitted false rates to benefit their trading positions, and manipulated rates during the 2008 financial crisis to make their banks appear healthier than they were. Evidence showed traders directly asking rate submitters to fix LIBOR at specific levels, calling it a 'cartel.'

Barclays was the first bank to settle, paying $450 million in fines in June 2012 — $200 million to the CFTC, $160 million to the DOJ, and £59.5 million to the FSA. The settlement revealed internal communications showing that Barclays' management had condoned the manipulation. CEO Bob Diamond resigned, and the scandal triggered investigations across the banking industry. UBS paid $1.5 billion, Deutsche Bank $2.5 billion, and Rabobank €774 million. Total fines exceeded $9 billion.

The UK's Wheatley Review recommended basing submissions on actual transactions, creating criminal sanctions for benchmark manipulation, and transferring administration from the British Bankers' Association to ICE. The Financial Services Act 2012 made false statements in benchmark-setting a criminal offense. Several traders were convicted, including Tom Hayes, though the UK Supreme Court quashed some convictions in 2025. LIBOR was later phased out as a market benchmark, replaced by transaction-based rates.