Six financial institutions were ordered by European Union regulators to pay 1.71 billion euros in fines for “colluding in an attempt to manipulate key benchmark interest rates, the EU’s largest-ever penalty in a cartel case,” as reported in the Wall Street Journal.
“The widely anticipated settlement, worth about $2.3 billion and announced by European Union antitrust officials on Wednesday, is the largest combined penalty ever levied by European competition authorities and marks the culmination of an investigation that dates back more than two years,” quoted from the Times Dealbook.
Some of the world’ largest banks were involved in the case: Deutsche Bank, Societe Generale SA, Royal Bank of Scotland Group, J.P. Morgan Chase, Barclays, and Citigroup were uncovered to be “improperly influencing the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor,” as quoted from the Times.
The impact of this story will hopefully be felt worldwide. While this news is the result of a years-long legal battle, quotes released from the accused banks do not sound very apologetic.
“The announcement also underscores the widespread nature of the attempted manipulation, involving coordinated campaigns by employees of many of the world’s biggest financial institutions to fudge benchmarks that underpin interest rates on everything from mortgages to corporate loans to financial derivatives,” wrote the reporters for the Journal.
“What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators world-wide, but also the collusion between banks who are supposed to be competing with each other,” Joaquin Almunia, the EU’s competition commissioner said, quoted from the Journal.
J.P. Morgan and Citigroup are the first two U.S. banks to be involved in the manipulation of benchmark rates. This case is groundbreaking for the EU; they’ve never levied such a huge fine against financial institutions.
These two articles were very different, but covered all of the same information and facts. The WSJ article was very long and over-bearing on the technical terms. It did have a larger, more prominent link on their webpage, compared to where the Times placed their link on their website.
The Dealbook is a column devoted to “Markets”, so one would expect their words to be more technical than an ordinary article. However, it was the opposite for these two articles. It was much easier to understand than the Wall Street Journal article.