Following Barclays’ $453 million settlement with U.S. and U.K. regulators arising out of its actions in manipulating the London interbank offered rate, or Libor, several issues remain for Barclays, as well as other big banks, including the possibility of additional regulatory actions and civil lawsuits as well as criminal charges. In particular, a flood of civil lawsuits are anticipated as a result of the trillions of dollars of financial products and vehicles that may have been improperly priced between 2005 and 2009 because of Libor manipulation. Other issues include additional regulatory probes of senior bank executives based on the findings in the Barclays’ investigation, which indicated that Barclays traders had discussions regarding Libor settings with employees at 16 competing banks. It is possible that other banks will follow the lead of Barclays and seek to settle early in the investigations. Additionally, regulators are seeking ways to improve rules governing the Libor setting process. Moreover, regulators themselves may face scrutiny as a result of the scandal for failing to address Libor issues when early warning signs first surfaced back in 2008. (“What's Next to Watch in Libor Drama,” Wall Street Journal, July 9, 2012).
For additional background on the Barclays settlement and ongoing Libor manipulation investigations, see Sedgwick’s Insurance News Flash of July 5, 2012 by clicking here.