Barclays Executives Knew Of Libor Lowballing,
October 21, 2013
Current and former executives at Barclays Plc (BARC) knew that the bank submitted lower-
than-accurate Libor rates as early as 2007, according to transcripts of conversations between
executives cited in a U.K. court case.
Mark Dearlove, head of Barclays’s money-market desk, told another executive, Jonathan Stone, he’d
received complaints about the bank’s submissions from an employee of JPMorgan Chase & Co.,
according to a transcript dated December 2007 and handed down in court. The document is being used
as evidence in a lawsuit in London against Barclays over an interest-rate swap.
“I don’t know what you guys are playing at,” Dearlove said. “We know you’re paying 540m, why are
you setting Libor rates at 530?” Companies in the Guardian Care Homes group are suing Barclays to
cancel an interest-rate swap deal linked to the London interbank offered rate, saying they wouldn’t
have agreed if they knew the benchmark was being rigged. An appeal by Barclays against the Libor
claims is being heard alongside a similar swap case against Deutsche Bank AG brought by Indian
property developer Unitech Ltd. (UT)
While Barclays hasn’t objected to the material being produced, “the bank does not consider any of the
new evidence to be relevant to the issues in front of the Court of Appeal,” Jon Laycock, a spokesman
for the lender, said in an e-mail.
Regulatory investigations in the U.S., U.K. and Asia found evidence traders and brokers tried to
influence Libor for profit, leading to fines and settlements totaling about $2.6 billion for Barclays,
Royal Bank of Scotland Group Plc, UBS AG (UBSN) and ICAP Plc. (IAP)
Robert Diamond, who resigned as chief executive officer of Barclays in the wake of the scandal, told
U.K. lawmakers in July 2012 testimony that all the panel banks lowered their submissions. He denied
knowing anything about it until a week before the regulators published their findings that month.
Dearlove told Stone the bank’s submissions were “all wrong” and wanted to escalate the complaint. “I
guess the quesions[sic] is, is everybody else, what’s happening with everybody else?” Stone replied,
according to the transcript.
In other evidence from the Guardian documents, a Barclays employee in Singapore asked its Libor
submitters to enter lower rates in order to earn profit for an investment fund run by the bank.
Quan Hui Lee e-mailed colleagues in London instructing them to “go get Libor down” and go
“LOWER! Go for 3 percent,” according to e-mail evidence. The e-mails come from a letter written by
Barclays’ lawyers, Clifford Chance LLP, that was sent to Singapore regulators in May 2013 detailing an
Ian Pike, a Barclays employee in London who submitted rates, wrote back to Lee saying: “I’ll do my
best boss!” according to the letter. The purpose of the changes was to make a profit or avoid losses at
the fund, according to Guardian.
Evidence provided in the case shows Barclays’ “misconduct goes further and wider than the regulatory
findings,” Guardian’s lawyers said in the documents. They said they couldn’t yet provide the court with
all the new material.
“My swaps have cost me 12 million pounds ($19 million), so the suggestion that these allegations are
irrelevant are fanciful,” Gary Hartland, Guardian Care Homes CEO, said in an e-mailed statement.
The Court of Appeal will rule on whether Unitech and Guardian can seek to tear up the swap deals, or
whether they must prove a loss and seek damages.
Its decision may “open the doors for many more such claims,” said Stewart Burrows, a lawyer not
involved in the hearing.
Barclays has argued Guardian owes 70 million pounds and said the Libor claims have no merit.
Guardian had advisers and enough experience and understanding to exercise its own judgment about
the suitability of the swap, Laycock said.
The appeal “isn’t concerned with the extent to which Barclays manipulated Libor or with the
regulators’ reports,” the bank’s lawyer, Robin Dicker, told the court this morning. It is to decide
whether Guardian “can rely on such content to avoid or reduce its obligations.”
Unitech presented e-mail evidence that Deutsche Bank employees had discussed clients being
“screwed” in swap deals. Both cases started out as mis-selling claims and later sought to add Libor
The cases are: Graiseley Properties Ltd & Ors. v. Barclays Bank Plc, case no. 12-1259, High Court of
Justice, Queen’s Bench Division; and Deutsche Bank AG (DBK) & Ors v. Unitech Global Limited &
Anr, case no. 11-1199, High Court of Justice, Queen’s Bench Division.
The Federal Reserve Could Up QE To $1
Trillion A Month
Matthew J. Belvedere
October 21, 2013
Marc Faber, publisher of The Gloom, Boom
& Doom Report, told CNBC on Monday that
investors are asking the wrong question
about when the Federal Reserve will taper
its massive bond-buying program. They
should be asking when the central bank will
be increasing it, he argued.
"The question is not tapering. The question is at
what point will they increase the asset
purchases to say $150 [billion] , $200 [billion],
a trillion dollars a month," Faber said in a "
Squawk Box " interview.
The Fed-which is currently buying $85 billion worth of bonds every month-will hold its October
meeting next week to deliberate the future of its asset purchases known as quantitative easing .
Faber has been predicting so-called "QE infinity" because "every government program that is
introduced under urgency and as a temporary measure is always permanent." He also said, "The Fed
has boxed itself into a position where there is no exit strategy." The continuation of Fed bond-buying
has helped support stocks, and the Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) and
S&P 500 Index (^GSPC) are coming off two straight weeks of gains, highlighted by record highs for
While there may be little inflation in the U.S., Faber said there's been incredible asset inflation. "We are
the bubble. We have a colossal asset bubble in the world [and] a leverage or a debt bubble."
Back in April 2012, Faber said the world will face "massive wealth destruction" in which "well to-do
people will lose up to 50 percent of their total wealth."
(Flashback: 'Massive wealth destruction' about to hit: Marc Faber )
In Monday's "Squawk" appearance, he said that could still happen but possibly from higher levels
because of the "asset bubble" caused by the Fed.
"One day this asset inflation will lead to a deflationary collapse one way or the other. We don't know
yet what will cause it," he said.
Faber: Fed could up QE to $1 trillion a month VIDEO BELOW
BECAUSE THERE'S A WAR ON FOR YOUR MIND