RBS 2014 Annual Report Download - page 110

108
RBS – Interim Results 2015
Notes
16. Litigation, investigations and reviews (continued)
LIBOR and other trading rates
In February 2013, RBS announced settlements with the Financial Services Authority (FSA) in the United
Kingdom, the United States Commodity Futures Trading Commission (CFTC) and the United States
Department of Justice (DOJ) in relation to investigations into submissions, communications and procedures
around the setting of LIBOR. RBS agreed to pay penalties of £87.5 million, US$325 million and US$150
million to these authorities respectively to resolve the investigations. As part of the agreement with the DOJ,
RBS plc entered into a Deferred Prosecution Agreement (DPA) in relation to one count of wire fraud relating
to Swiss Franc LIBOR and one count for an antitrust violation relating to Yen LIBOR.
In addition, on 12 April 2013, RBS Securities Japan Limited entered a plea of guilty to one count of wire
fraud relating to Yen LIBOR and on 6 January 2014, the US District Court for the District of Connecticut
entered a final judgment in relation to the conviction of RBS Securities Japan Limited pursuant to the plea
agreement.
On 17 April 2015, following expiry of the DPA, the DOJ filed a motion seeking dismissal of the criminal
information underlying the DPA. On 21 April 2015, the US District Court in Connecticut granted the motion
and ordered the charges dismissed; as a result, the DPA is no longer in effect.
In February 2014, RBS paid settlement penalties of approximately EUR 260 million and EUR 131 million to
resolve investigations by the European Commission (EC) into Yen LIBOR competition infringements and
EURIBOR competition infringements respectively. This matter is now concluded.
In July 2014, RBS entered into an Enforceable Undertaking with the Australian Securities and Investments
Commission (ASIC) in relation to potential misconduct involving the Australian Bank Bill Swap Rate. RBS
undertakes in the Enforceable Undertaking to (a) comply with its existing undertakings arising out of the
February 2013 settlement with the United States Commodity Futures Trading Commission as they relate to
Australian Benchmark Interest Rates, (b) implement remedial measures with respect to its trading in
Australian reference bank bills and (c) appoint an independent compliance expert to review and report on
RBS’s implementation of such remedial measures. The remediation measures include ensuring appropriate
records retention, training, communications surveillance and trading reviews are in place. As part of the
Enforceable Undertaking, RBS also agreed to make a voluntary contribution of A$1.6 million to fund
independent financial literacy projects in Australia.
On 21 October 2014, the EC announced its findings that RBS and one other financial institution had
participated in a bilateral cartel aimed at influencing the Swiss franc LIBOR benchmark interest rate between
March 2008 and July 2009. RBS agreed to settle the case with the EC and received full immunity from fines
for revealing the existence of the cartel to the EC and co-operating closely with the EC’s ongoing
investigation. Also on 21 October 2014, the EC announced its findings that RBS and three other financial
institutions had participated in a related cartel on bid-ask spreads of Swiss franc interest rate derivatives in
the European Economic Area (EEA). Again, RBS received full immunity from fines for revealing the
existence of the cartel to the EC and co-operating closely with the EC’s ongoing investigation.