On 28 July 2014, the UK FCA and the US CFTC announced that regulatory action had been taken against Lloyds Banking Group. The FCA fined Lloyds Bank and Bank of Scotland, both part of the Lloyds Banking Group, £105 million for misconduct relating to the Special Liquidity Scheme (“SLS”), the Repo Rate benchmark and the LIBOR. The FCA found that the firms had failed to identify and implement proper controls to manage the risks, breaching the FCA’s Fundamental Principles. The FCA levied the larger part of the fine for the misconduct relating to the Repo Rate which the regulator considered to be the  more serious of the breaches.

The CFTC issued an order bringing and settling charges against Lloyds Banking Group plc and Lloyds Bank plc for acts of false reporting and attempted manipulation of the LIBOR. The CFTC order requires Lloyds Banking Group and Lloyds Bank to pay a $105 million civil monetary penalty, cease and desist from their violations of the Commodity Exchange Act, and to adhere to specific undertakings to ensure the integrity of LIBOR submissions in the future. In a related action, the US Department of Justice announced that it had entered into a deferred prosecution agreement with Lloyds Banking Group in exchange for cooperation and the payment of an $86 million penalty.

The FCA final notice is available at: http://www.fca.org.uk/static/documents/final-notices/lloyds-bank-of-scotland.pdf

The CFTC enforcement order is available at:

http://www.cftc.gov/ucm/groups/public/@lrenforcementactions/documents/legalpleading/enflloydsorderdf072814.pdf