A former trader of Rabobank has pleaded guilty for his role in conspiring to manipulate the yen LIBOR rate, becoming the second employee of the Dutc-based firm to admit guilt in the probe into the rigging of interest benchmarks worldwide.

A former trader of Rabobank has pleaded guilty for his role in conspiring to manipulate the yen LIBOR rate, becoming the second employee of the Dutch-based firm to admit guilt in the probe into the rigging of interest benchmarks worldwide.

Paul Robson, a UK citizen, pleaded guilty in a New York federal court to one count of conspiracy to commit wire and bank fraud by manipulating Rabobank’s yen LIBOR submissions to benefit trading positions between 2006 to 2011, the Department of Justice said in a statement.

Robson is the second former Rabobank trader to plead guilty this year. In June, Takayuki Yagami, a Japanese national, pleaded guilty to one count of conspiracy to commit wire and bank fraud.

“The scope of the fraud was massive, but the scheme was simple. By illegally influencing the LIBOR rates, Robson and his co-conspirators rigged the markets to ensure that their trades made money. Robson’s conviction demonstrates the Department of Justice’s continued resolve to hold individuals and institutions accountable for their involvement in fraud in the financial markets,” said assistant attorney general Leslie Caldwell.  

According to court documents, Robson worked as a senior trader at Rabobank’s money markets and short-term forwards desk in London and served as Rabobank’s primary submitter of yen LIBOR to the British Banker’s Association. His main role in the conspiracy was to submit yen LIBOR rates at the requests of traders who had derivatives contracts containing yen LIBOR as a price component.   

According to the allegations, Robson made yen LIBOR submissions requested by Yagami and other traders that were artificially high or low.

The Justice Department said that, in 2007, Yagami asked Robson by email for a higher LIBOR rate. Robson responded, “No prob mate let me know your level.” After Yagami had made his request, Robson confirmed, “Sure no prob…. I’ll probably get a few phone calls, but no worries mate… there’s bigger crooks in the market than us guys!”

Robson, along with former Rabobank yen LIBOR derivatives traders Paul Thompson, of Australia, and Tetsuya Motomura, of Japan, was charged with conspiracy to commit wire and bank fraud as well as substantive counts of wire fraud.   

The indictment also alleged that the conspiracy involved numerous additional, unnamed individuals and entities.   

In October last year, Rabobank agreed to pay more than $1 billion in criminal and civil penalties to settle investigations by US, UK and other regulatory authorities for its role in manipulating LIBOR.

The fine included a $325 million criminal penalty to the US Justice Department and $170 million to the UK’s Financial Conduct Authority. Rabobank’s chief executive stepped down immediately after the announcement.

Lloyds

Last month, partly state-owned Lloyds Banking Group was fined $370 million by UK and US authorities for the manipulation of LIBOR and other benchmark failings.

The manipulation of submissions covered by the settlements took place between May 2006 and 2009. Lloyds said in a statement that the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings. The penalty makes the group the seventh company to be fined by UK and US authorities in the LIBOR-rigging investigation.

As well as attempting to rig the US LIBOR rate, Lloyds also colluded with Rabobank to influence the Japanese yen LIBOR rate.

The penalty for Lloyds comes two years after Barclays was fined $450 million by US and UK regulators for trying to manipulate LIBOR, which led to the resignations of Barclays' chief executive Bob Diamond and chairman Marcus Agius in the UK.

Following the LIBOR scandal in 2012, a number of other banks were also fined, including UBS and Royal Bank of Scotland, for fixing the rate in order to boost the profits of traders prior to the financial crisis.

At the end of last year, the European Union also levied a record fine of €1.7 billion ($2.3 billion) on six European and US banks, including Deutsche Bank, Societe Generale, Royal Bank of Scotland, and Citigroup.

LIBOR is based on the interest rates leading banks charge when loaning money to other banks overnight, which is supposed to represent the cost of a bank's lending activities.

As the primary benchmark for short-term interest rates globally, LIBOR is used for many interest rate contracts, mortgages, credit cards, student loans and other consumer-lending products.

The scandal arose both during and before the financial crisis when it was discovered that banks were manipulating rates so as to profit from trades or give the impression they were more credit-worthy than they actually were.