In the Matter of: 

UNITED STATES OF AMERICA 

Before the 

COMMODITY FUTURES TRADING COMMISSION 

) 

) 

) 

Lloyds Banking Group pic and 

Lloyds Bank pic, 

) CFTC Docket No. 14- 18 

) 

) 

Respondents. ) 

--------------) 

ORDER INSTITUTING PROCEEDINGS PURSUANT TO 

SECTIONS 6(c) AND 6(d) OF THE COMMODITY EXCHANGE ACT, 

MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS 

I. 

The Commodity Futures Trading Commission ("Commission" or "CFTC") has reason to 

believe that Lloyds Banking Group pic and its subsidiary Lloyds Bank pic ( coiiectively, 

"Respondents") have violated Sections 6(c), 6(d) and 9(a)(2) ofthe Commodity Exchange Act 

(the "Act" or the "CEA"), 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006). Lloyds Banking Group pic 

("Lloyds Banking Group") is the entity resulting from the acquisition in 2009 ofHBOS pic 

("HBOS") by Lloyds TSB Group pic. Lloyds Bank pic, formerly known as Lloyds TSB Bank 

pic ("Lloyds TSB"), is the current parent ofHBOS. Therefore, the Commission deems it 

appropriate and in the public interest that public administrative proceedings be, and hereby are, 

instituted to determine whether Respondents engaged in the violations set forth herein, and to 

determine whether any order shaii be issued imposing remedial sanctions. 

II. 

In anticipation of the institution of an administrative proceeding, Respondents have 

submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. 

Without admitting or denying the findings or conclusions herein, except to the extent 

Respondents admit those findings in any related action against Respondents by, or any 

agreement with, the Department of Justice or any other governmental agency or office, 

Respondents herein consent to the entry and acknowledge service of this Order Instituting 

Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, Making 

Findings and Imposing Remedial Sanctions ("Order"). 1 

Respondents consent to the entry of this Order and to the use of these findings and conclusions in this 

proceeding and in any other proceeding brought by the Commission or to which the Commission is a 

party; provided, however, that Respondents do not consent to the use of the Offer, or the findings or 

conclusions in this Order, as the sole basis for any other proceeding brought by the Commission, other 

than in a proceeding in bankruptcy or to enforce the terms of this Order. Nor do Respondents consent to 
III. 

The Commission finds the following: 

A. Summary 

From mid-2006 through 2009 (the "relevant period"), Respondents, by and through 

Lloyds TSB and HBOS,2 committed certain acts of manipulation, attempted manipulation and 

false reporting in connection with the London Interbank Offered Rate ("LIBOR") for Sterling, 

U.S. Dollar, and Yen. LIBOR is a leading global benchmark interest rate that is critical to U.S. 

and international financial markets. Trillions of dollars of financial instruments are priced based 

on LIBOR. 

LIBOR, a benchmark interest rate previously owned and managed by the British 

Bankers' Association ("BBA''), is fixed each day based on rates submitted by a select panel of 

banks. The rates contributed by the panel banks are supposed to reflect each bank's honest 

assessment of the cost of borrowing unsecured funds in the London interbank market. Over the 

relevant period, Lloyds TSB and HBOS violated this fundamental precept and undermined the 

integrity ofLIBOR for Sterling, U.S. Dollar, and Yen. 

• 

• 

Before the acquisition ofHBOS in January 2009, the Sterling and U.S. Dollar LIBOR 

submitters at each bank individually altered LIBOR submissions on occasion to 

benefit the submitters' and traders' cash and derivatives trading positions. Upon the 

consolidation of the two companies, the submitters, who were located in separate 

offices, coordinated with one another to adjust LIB OR submissions to benefit their 

respective trading positions. 

From at least mid-2006 to October 2008, the Lloyds TSB Yen LIBOR submitter 

colluded with the Yen LIBOR Submitter at Cooperatieve Centrale RaiffeisenBoerenleenbank B.A. ("Rabobank") to adjust their respective Yen LIBOR 

submissions in order to benefit the trading positions ofLloyds TSB and Rabobank.3 

the use of the Offer or this Order, or the findings and conclusions in this Order consented to in the Offer, 

by any other pa~iy in any other proceeding. 

Prior to 2009, Lloyds TSB and HBOS, through its subsidiaries, HBOS Treasury Services pic until 

September 2007 and, thereafter, Bank of Scotland pic, were members of LIB OR panels for several 

currencies. Upon their consolidation under Lloyds Banking Group in early 2009, they continued to make 

separate submissions for these currencies until HBOS's removal from the LIBOR panels on February 6, 

2009. 

On October 29, 2013, the Commission issued an Order Instituting Proceedings Pursuant to Sections 

6(c) and 6(d) of the Commodity Exchange Act, Making Findings, and Imposing Remedial Sanctions 

against Rabobank, finding, among other things, that the Lloyds TSB Yen Submitter- identified in the 

Order as the Panel Bank C Yen Submitter-and the Rabobank Yen Submitter colluded in their attempts 

to manipulate and falsely report Yen LIBOR. See In re Cooperatieve Centrale RaiffeisenBoerenleenbank B.A., CFTC Docket No. 14-02 (CFTC filed October 29, 2013); at 

2 
• During the global financial crisis in the last quarter of 2008, HBOS, through the acts 

of its submitters and a manager, improperly altered and lowered HBOS 's Sterling and 

U.S. Dollar LIBOR submissions to create a market perception that HBOS was 

relatively financially healthy and not a desperate borrower of cash. Specifically, the 

manager who supervised the HBOS Sterling and U.S. Dollar LIBOR submitters 

directed the submitters to make LIBOR submissions at the rate of the expected 

published LIB OR so that the bank did not stand out as a material outlier from the rest 

of the submitting banks. The submitters followed these instructions, making 

submissions through the end of the year that did not reflect their honest assessment of 

HBOS' s cost of borrowing unsecured interbank funds, and, accordingly, were not 

consistent with the BBA LIB OR definition. 

• In 2006, Lloyds TSB and HBOS submitters on ce1iain occasions increased their bids 

for Sterling in the cash market in an attempt to manipulate the published Sterling 

LIB OR fixing higher, thereby benefitting specific trading positions that were tied to 

Sterling LIBOR. 

Lloyds TSB 's and HBOS 's lack of specific internal controls and procedures concerning 

their submission processes for LIB OR, and their overall inadequate supervision of money market 

trading desks allowed this conduct to occur. 

The profitability of a bank's trading positions or a bank's reputational concerns are not 

legitimate or permissible factors on which to base a bank's daily LIBOR submissions. 

Benchmark interest rates submissions convey market information about the costs of borrowing 

unsecured funds in particular currencies and tenors, the liquidity conditions and stress in the 

money markets and a bank's ability to borrow funds in the particular markets. By basing their 

submissions, in whole or in part, on Lloyds TSB's and HBOS's trading positions and HBOS's 

market reputation concerns, Respondents knowingly conveyed false, misleading or knowingly 

inaccurate reports that their submitted rates for Sterling, U.S. Dollar and Yen LIBOR were based 

on and solely reflected the costs of borrowing unsecured funds in the relevant interbank markets. 

Accordingly, Respondents attempted to manipulate and knowingly delivered, or caused to be 

delivered, false, misleading or knowingly inaccurate reports concerning Sterling, U.S. Dollar and 

Yen LIBOR, which are all commodities in interstate commerce. In a few instances, 

Respondents, by and through Lloyds TSB 's actions, were successful in their attempts to 

manipulate Sterling and Yen LIBOR. 

******* 

In accepting Respondents' Offer, the Commission recognizes Respondents' cooperation 

during the Division of Enforcement's investigation of this matter. 

http://www. eft c. gov /ucm/groups/pu b l i c/C?ill renforcementacti ons/docum ents/1 egal plead i ng/enfrabobank l 02 

913.pdf. 

3 
B. Respondent 

Lloyds Banking Group pic is a United Kingdom-based financial services group, 

providing a wide range of banking and financial services. Lloyds Banking Group resulted from 

the January 19, 2009 acquisition by Lloyds TSB Group pic (the parent company ofLioyds TSB 

Bank pic) of HBOS (the parent company of Bank of Scotland plc ). After the acquisition, Lloyds 

TSB Group pic changed its name to Lloyds Banking Group pic and became the ultimate holding 

company ofLioyds TSB Bankplc and HBOS.4 

Lloyds Bank pic, formerly called Lloyds TSB Bank pic, is a United Kingdom retail and 

commercial bank and the principal subsidiary of Lloyds Banking Group. In 2013, it became the 

parent company of HBOS, which is its principal subsidiary. HBOS is the parent company of 

Bank of Scotland pic, which is also a United Kingdom retail and commercial bank. 

C. Facts 

1. LIB OR and the Fixing of LIBOR 

LIB OR is the most widely used benchmark interest rate in the world and affects market 

participants and consumers throughout the world, including in the United States. LIB OR is used 

as a barometer to measure strain in money markets and is often a gauge of the market's 

expectation of future central bank interest rates. LIBOR is used in interest rate transactions, 

including loans, over-the-counter swaps, and exchange-traded interest rate futures and options 

contracts. The products indexed to LIBOR have an approximate notional value of $500 trillion. 

During the relevant period, under the auspices of the BBA,5 LIBORs were issued on a 

daily basis for ten currencies, including Sterling, U.S. Dollar, and Yen, with fifteen tenors (i.e., 

durations for interest rates) ranging from overnight through twelve months. Certain currencies, 

such as Sterling, U.S. Dollar, and Yen, are more widely referenced in interest rate contracts. 

One, three and six-months are the most common tenors referenced in LIBOR-indexed 

transactions. 

According to the BBA, LIBOR "is based on offered inter-bank deposit rates contributed 

in accordance with the Instructions to BBA LIBOR Contributor banks." The BBA explained 

that: 

[a]n individual BBA LIBOR Contributor Panel Bank will contribute the rate at 

which it could borrow funds, were it to do so by asking for and then accepting 

4 The offer to acquire HBOS was atmounced on September 18, 2008. HBOS shareholders approved 

this offer on December 12, 2008 and the acquisition was consummated on January 19, 2009. 

On February 1, 2014, ICE Benchmark Administration Limited was appointed as the new 

administrator for LIBOR, following authorization by the U.K. Financial Conduct Authority ("FCA"). 

4 
inter-bank offers in reasonable market size just prior to [11 :00 a.m. London 

time]. 6 

Every business day shortly before 11 :00 a.m. London time, the banks on the LIBOR 

panels submitted their rates to Thomson Reuters. A trimmed averaging process excluded the top 

and bottom quartile of rates and the remaining rates were averaged for each tenor. That averaged 

rate became the official BBA daily LIBOR (the "LIBOR fixing") for each tenor. 

The BBA made public the daily LIBOR fixing for each currency and tenor, as well as the 

daily submissions of each panel bank, through Thomson Reuters and the other data vendors 

licensed by the BBA. This information was made available and relied upon by market 

participants and others throughout the world, including in the United States. 

By its definition, LIB OR requires that the submitting panel banks exercise their judgment 

to determine the rates at which they may obtain unsecured funds in the London interbank market. 

These definitions require that submissions relate to funding and do not permit consideration of 

factors unrelated to the costs of borrowing unsecured funds, such as the benefit to a bank's 

derivatives or money market trading positions.7 

2. Lloyds TSB's and HBOS's LIBOR Submission Process 

During the relevant period, Lloyds TSB was a member of the BBA and one of the panel 

banks that submitted rates for the determination of LIB OR in Sterling, U.S. Dollar, Yen, and 

other currencies.8 Until its acquisition in January 2009, HBOS, through its subsidiaries HBOS 

Treasury Services pic until September 2007 and thereafter Bank of Scotland pic, was likewise a 

member of the BBA and was one of the panel banks that submitted rates for the determination of 

LIBOR in Sterling, U.S. Dollar, and other currencies.9 Following the acquisition, Lloyds TSB 

and HBOS continued to make their respective LIBOR submissions until February 2009, when 

HBOS ceased to be a LIBOR panel member. Lloyds TSB continued to make LIBOR 

submissions on behalf of Lloyds Banking Group, who became the representative member on the 

BBA LIBOR panels. 

Lloyds TSB and HBOS made their money market traders in London responsible for 

making the banks' LIBOR submissions. The money market traders at each bank were organized 

6 This definition ofLIBOR has been used since 1998 to the present. 

7 In June 2008, the BBA clarified that panel banks could not contribute a rate based on the pricing of 

any derivative financial instrument. BBA guidelines issued in October 2009 further clarified that LIBOR 

submitters "should not ask intermediaries where they believe LIBOR rates will set on a given day and use 

this as a basis for submissions. This misses the point of the benchmark, and is a circular process that 

would rapidly lead to inaccurate rates." 

During the relevant period, Lloyds TSB also submitted rates for the determination of LIB OR in other 

currencies such as Euro, Canadian Dollar, Australian Dollar, and Swiss Franc. 

9 During the relevant period before its acquisition, HBOS also submitted rates for the determination of 

LIBOR in other currencies such as Euro, Canadian Dollar, and Australian Dollar. 

5 
on trading desks by currency within the banks' respective Treasury departments. These traders 

transacted in interbank cash deposits and loans, certificates of deposit and commercial paper to 

raise wholesale funds for the bank in the currency for which the desk was responsible. The 

traders also transacted in derivatives trading products primarily to hedge risk, but generally did 

not trade derivatives trading products to generate profits in a proprietary fashion. A trader on 

each bank's currency desk made that bank's LIBOR submission for that currency. Another 

trader acted as the back-up LIBOR submitter and made the LIBOR submissions when the 

primary submitter was out of the office or otherwise unavailable. 

During the relevant period, Lloyds TSB and HBOS failed to adequately supervise their 

LIBOR submitters and the LIBOR submission process and did not have any specific policies, 

internal controls or procedures for determining or monitoring their LIBOR submissions to ensure 

that their submissions reflected an honest assessment of the costs of borrowing unsecured funds 

in the London interbank market. This lack of supervision and training permitted Lloyds TSB and 

HBOS LIBOR submitters to attempt to manipulate and knowingly make false Sterling, U.S. 

Dollar, and Yen LIBOR submissions on several occasions over a number of years. 

3. Lloyds TSB and HBOS Made False Reports, Attempted to Manipulate and 

Manipulated Sterling LIBOR to Benefit Their Cash and Derivatives Trading 

Positions 

On numerous occasions, from at least 2007 through at least 2009, the Lloyds TSB 

Sterling LIBOR Submitter made false submissions and attempted to manipulate Sterling LIBOR 

in order to benefit his cash and derivatives trading positions. In a few instances, the Lloyds TSB 

Sterling LIBOR Submitter was successful in his attempts to manipulate Sterling LIBOR. 

The Lloyds TSB Sterling LIBOR Submitter held cash and derivatives trading positions 

that were priced off of Sterling LIB OR, and these positions frequently settled or reset at the end 

of each month or on International Monetary Market ("IMM") dates, which are quarterly dates in 

March, June, September, and December. The Submitter knew how movements in Sterling 

LIB OR would affect his trading positions. On a number of occasions, the Submitter altered his 

Sterling LIBOR submissions to benefit his trading positions. Thus, on those occasions, the 

Sterling LIBOR submissions for Lloyds TSB reflected the Submitter's financial interests, rather 

than the costs of borrowing Sterling in the London interbank market. 

In contemporaneous communications with an interdealer broker, the Lloyds TSB Sterling 

LIBOR Submitter commented on how he was improperly taking his trading positions into 

account when making LIBOR submissions. In one telephone exchange on June 28, 2007, the 

Lloyds TSB Sterling LIBOR Submitter explained how he depended on his Sterling LIBOR 

submissions to profit from his trading positions. 10 

10 The communications quoted in this Order contain shorthand trader language and many typographical 

errors. The shorthand and errors are explained in brackets within the quotations only when deemed 

necessary to assist with understanding the discussion. 

6 
June 28,2007: (emphasis added) 

Lloyds TSB Sterling Submitter: No, no, because my book predominantly is 

fucking one month. 

[ ... ] 

Broker I: No, you're very much tied to I month, totally. 

[ ... ] Yeah, because all your assets are Is, yeah. 

Lloyds TSB Sterling Submitter: If I didn't have my LIBOR slightly higher 

than I usually did, we wouldn't even make-- if 

I have my LIBORs where LIBORs are, in Is, I 

wouldn't make anything. 

In another telephone call made in August 2007, he stated that, because he had no positions 

resetting that day, he could submit his LIBORs "wherever I fucking want to put them, mate." 

Prior to the acquisition ofHBOS in January 2009, the HBOS Sterling LIBOR Submitter 

occasionally made false submissions and also attempted to manipulate Sterling LIBOR in order 

to benefit his cash and derivatives trading positions. After the acquisition until the summer of 

2009, the Lloyds TSB Sterling LIBOR Submitter and the former HBOS Sterling LIBOR 

Submitter were located in different offices, and communicated regularly regarding their 

respective trading positions. During certain of these telephone conversations, the submitters 

discussed the sensitivity of their trading positions to the Sterling LIBOR fixings, and then 

coordinated to adjust the Sterling LIBOR submissions to benefit those positions. At times, the 

former HBOS Sterling LIB OR Submitter requested that the Lloyds TSB Sterling LIBOR 

Submitter adjust the submissions for the one and three-month tenors in order to benefit his 

trading positions. Often, the Lloyds TSB Sterling LIBOR Submitter accommodated his requests 

and made the Sterling LIBOR submission based on the rate that benefited the former HBOS 

Sterling LIBOR Submitter's trading positions, unless the Lloyds TSB Sterling LIBOR Submitter 

had a trading position that might benefit from a different rate being submitted. Examples of such 

communications are as follows: 

March 6, 2009: (emphasis added) 

Former HBOS Sterling Submitter: I am paying on 12 yards of 1s today; a re-fix 

against Group, so if is there any way of 

making 1s relatively low, it would be 

helpful for us all. [ ... ] I think it is going to 

be about I26 or something, maybe I28, it is a 

tricky one at the moment. 

Lloyds TSB Sterling Submitter: Well I could, I mean I have left mine at I25 

mate, I mean. 

Former HBOS Sterling Submitter: Yeah, well I that will be perfect. As long as 

you-you can't go lower than 125, if you are 

going at 125 that is what, that is what I am 

hoping to shape it down to, so if you can do 

that, that would be great. 

Lloyds TSB Sterling Submitter: Yeah I have got a fixing small one nowhere 

near 12 yards, so yeah I do it at 25, alright? 

7 
Former HBOS Sterling Submitter: And I am a payer the 3s as well, I don't 

know what were you thinking of going in the 

3s. [ ... ] I have only 500 quid the 3s so I am 

not that-it's not the end of the world, but if 

you're the other way around don't worry 

about it. 

Lloyds TSB Sterling Submitter: No, no, no, I have got a small loan going out 

but it is less than that, alright I will 

probably have to go 90- probably 96 but I 

will let you know before, I do 25 definitely 

for ls and I will speak to you onFormer HBOS Sterling Submitter: Yeah don't stress mate, go 25 in the ls and 

just go with what you can in the 3s. No great 

stress. 

Lloyds TSB Sterling Submitter: Yeah, no problem. 

Former HBOS Sterling Submitter: Alright thanks. 

March 31,2009: (emphasis added) 

Former HBOS Sterling Submitter: 

Lloyds TSB Sterling Submitter: 

Former HBOS Sterling Submitter: 

Lloyds TSB Sterling Submitter: 

Former HBOS Sterling Submitter: 

[ ... ] I was just going to say, I am receiving 

on 3s LIBOR today on a couple on-on a 

big reset on about 2 and a halfyards and I 

am receiving tomorrow on 5 yards, so on 

the LIBOR front obviously I don't know if 

you have got anything contrary to that, but 

if you haven't the firmer the better please. 

The higher the better. 

Yes please. 

Oh mate, I have always got loads of loans 

going out at the end of the month so I 

always try and fix it higher, so. Trouble is 

mate they keep calling it fucking lower, I can't 

work out why it is fucking going down all the 

time. [ ... ] I mean we put 67 in yesterday, I 

will leave it at 67 and I won't go any lower, 

right? 

Yeah. 

Lloyds TSB Sterling Submitter: What do you need, and what was the other 

period, was it all 3s? 

Former HBOS Sterling Submitter: No just 3s today and tomorrow. 

Lloyds TSB Sterling Submitter: Okay, we will leave it at 67. 

Former HBOS Sterling Submitter: Yeah cool, just lsI am small receiving 

today, tomorrow is a massive one in the ls. 

I am paying but we'll worry about ls 

tomorrow? 

8 
Lloyds TSB Sterling Submitter: Well luckily not today mate because I have 

got trillions and billions of ls going out 

today, tomorrow I can set it slightly lower. 

Former HBOS Sterling Submitter: Yeah that's cool, I am receiving Is today in 

the yard, tomorrow I am paying on 11.5 yards. 

[ ... ] In the 1 s but we will worry about it 

tomorrow, tomorrow. 

Lloyds TSB Sterling Submitter: Yeah, okay mate no problem 

The next day, April 1, 2009, the Lloyds TSB Sterling LIBOR Submitter had a junior 

trader on the desk contact the former HBOS LIBOR Submitter to confirm what he needed for the 

submissions for one and three-month tenors. 

Aprill, 2009: 

Lloyds TSB Junior Trader: 

Former HBOS Sterling Submitter: 

Lloyds TSB Junior Trader: 

Just a quick question: do you have lots of ls 

fixing today? Do you want us to keep the 

libor higher? 

Yeah, I have a big liability fix, so as low as 

possible, please. [ ... ] But I have a massive 

asset fix in the 3s, so as high as you can in the 

3s. 

Oh, right. Okay, okay. Got it. 

The Lloyds Junior Trader transmitted these requests to the Lloyds TSB Sterling LIBOR 

Submitter. 

In September 2009, the Lloyds TSB Junior Trader discussed their submission process in a 

chat with another Lloyds TSB employee, and explained that while the submitters paid attention 

to Lloyds TSB's borrowing and lending when making Sterling LIBOR submissions, they also 

took into account "what our [trading] position is when inputting our libors." The Lloyds TSB 

Sterling LIBOR Submitter continued to base his submissions at times on the benefit to his or the 

former HBOS Sterling LIBOR Submitter's trading positions through at least 2009. 

From at least 2007 through at least 2009, the Lloyds TSB and HBOS Sterling LIBOR 

submitters each attempted to manipulate their respective Sterling LIBOR fixings on numerous 

occasions for the benefit of their own cash and derivatives trading positions. Lloyds TSB and 

HBOS, through their submitters, knew it was improper to consider trading positions in 

determining the bank's LIBOR submissions. A panel bank's trading positions are not legitimate 

or permissible factors on which to base a bank's daily LIBOR submissions. By basing its 

LIBOR submissions on rates that benefited submitters' trading positions, the Sterling LIBOR 

submissions for Lloyds TSB and HBOS were not made in accordance with the BBA definition 

and criteria for LIBOR submissions. To the contrary, Lloyds TSB and HBOS conveyed false, 

misleading or knowingly inaccurate reports that its submitted rates for Sterling LIBOR were 

based on and solely reflected the costs of borrowing unsecured funds in the relevant interbank 

markets. Accordingly, Lloyds TSB and HBOS attempted to manipulate and knowingly 

delivered, or caused to be delivered, false, misleading, or knowingly inaccurate reports 

9 
concerning Sterling LIBOR, which is a commodity in interstate commerce. In a few instances, 

Lloyds TSB was successful in manipulating Sterling LIBOR through the false and unlawful 

submissions. 

4. Lloyds TSB and HBOS Made False Reports and Attempted to Manipulate 

U.S. Dollar LIBOR to Benefit Their Cash and Derivatives Trading Positions 

The Lloyds TSB and HBOS U.S. Dollar LIBOR submitters on occasion took their cash 

and derivatives trading positions into account when determining their U.S. Dollar LIBOR 

submissions for their respective banks. Accordingly, the Lloyds TSB and HBOS U.S. Dollar 

LIBOR submitters occasionally made false submissions and attempted to manipulate U.S. Dollar 

LIBOR in order to benefit their trading positions. 

On specific occasions, the submitters received and considered requests for certain U.S. 

Dollar LIBOR submissions from other traders. For example, on January 17, 2008, a HBOS 

trader contacted the HBOS U.S. Dollar LIB OR Submitter, a friend of his, and stated, "3mth 

higher today pis!" The HBOS U.S. Dollar LIBOR Submitter replied, "Should be 92 for guide ill 

put in 93 to get couunted." In a 2008 telephone call, the Lloyds TSB U.S. Dollar LIBOR 

Submitter stated that if he received a request from a Lloyds TSB trader, and did not have any of 

his own trading positions fixing or resetting, he would adjust the Lloyds TSB U.S. Dollar LIBOR 

submissions by a basis point or two in response to that request. 

Upon the 2009 acquisition, the Lloyds TSB and the former HBOS U.S. Dollar LIBOR 

submitters, similar to the Sterling LIBOR submitters, discussed their respective trading positions 

and, on occasion, coordinated on what submissions to make to benefit their trading positions. 

For example, on May 11, 2009, the former HBOS U.S. Dollar LIBOR Submitter stated to the 

trader who assisted the Lloyds TSB U.S. Dollar LIBOR Submitter, "when we have big resets as 

to be honest we shoudl be co ordinating the libor inputs to suit the books. for example later this 

month i have a 5y 3 month liability reset so we shoudl put in a low one there ill let u know." 

Then, on May 19, 2009, the former HBOS U.S. Dollar LIBOR Submitter contacted the trader 

who assisted the Lloyds TSB U.S. Dollar LIBOR Submitter and specifically requested a lower 

three-month U.S. Dollar LIBOR submission to benefit his trading position. The Lloyds TSB 

U.S. Dollar LIBOR Submitter complied, stating on a telephone call, "we got the LIBORs down 

for you." 

Over this period, the submitters and traders for Lloyds TSB and HBOS on occasion 

attempted to manipulate the U.S. Dollar LIBOR fixings at times for the benefit of their own cash 

and derivatives trading positions. Lloyds TSB and HBOS, through their submitters and traders, 

knew it was improper to consider trading positions in determining their banks' LIBOR 

submissions. A panel bank's trading positions are not legitimate or permissible factors on which 

to base a bank's daily LIBOR submissions. By basing its LIBOR submissions on rates that 

benefited traders' trading positions, the submissions for Lloyds TSB and HBOS were not made 

in accordance with the BBA definition and criteria for LIBOR submissions. To the contrary, 

Lloyds TSB and HBOS conveyed false, misleading or knowingly inaccurate reports that its 

submitted rates for U.S. Dollar LIBOR were based on and solely reflected the costs of borrowing 

unsecured funds in the relevant interbank markets. Accordingly, Lloyds TSB and HBOS 

10 
attempted to manipulate and knowingly delivered, or caused to be delivered, false, misleading, or 

knowingly inaccurate reports concerning U.S. Dollar LIBOR, which is a commodity in interstate 

commerce. 

5. Lloyds TSB Colluded with Rabobank to Make False Reports, to Attempt to 

Manipulate and to Manipulate Yen LIBOR for the Benefit ofLioyds TSB's 

and Rabobank's Trading Positions 

From at least mid-2006 through at least October 2008, the Lloyds TSB Yen LIB OR 

Submitter at times coordinated with and aided and abetted a senior Yen LIB OR submitter at 

Rabobank in attempts to manipulate and falsely repoti Yen LIBOR in order to benefit Lloyds 

TSB and Rabobank trading positions. Through this collusion, the Lloyds TSB Yen LIBOR 

Submitter sought to accommodate the Rabobank Yen LIB OR Submitter's requests for 

submissions that would benefit the derivative trading positions of Rabobank traders. The Lloyds 

Yen LIBOR Submitter also on occasion made his own requests to the Rabobank Yen LIBOR 

Submitter for submissions that would benefit Lloyds TSB's trading positions. In a few instances, 

the Lloyds TSB Yen LIB OR Submitter was successful in his attempts to manipulate Yen 

LIBOR. The Lloyds TSB Yen LIBOR Submitter also occasionally made submissions that would 

benefit his own trading positions. 

Over this period, the two Yen LIB OR submitters regularly communicated with each other 

about the rates each would submit for Yen LIBOR. In some of these communications, the 

Rabobank Yen LIBOR Submitter asked the Lloyds TSB Yen LIBOR Submitter to adjust his Yen 

LIBOR submissions in a direction that benefited Rabobank traders' positions. The Lloyds TSB 

Yen LIBOR Submitter frequently acknowledged these requests and agreed to assist him, unless 

the Rabobank Yen LIBOR Submitter's requests conflicted with the Lloyds TSB Yen LIBOR 

Submitter's own trading positions. The following are examples of these communications. 

June 27, 2006: (emphasis added) 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

July 27,2006: (emphasis added) 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

January 5, 2007: 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

just for your info skip ... i need a high lmth 

today - so i will be setting an obseenly high 1 

mth (6) 

sure mate no worries ... give us an idea where 

and I'll try n oblige ... ;) 

morning skip .... my little ... [racial epithet 

redacted] friend in tokyo wants a high 1m fix 

from me today .... am going to set .37- just for 

your info sir 

that suits mate as got some month end fixings 

so happy to ablige .. rubbery jubbery .. :-0 

need a high 1 mth fix today mate -just for info ;) 

suits (bu) 

11 
Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

March 19, 2008: (emphasis added) 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

March 28, 2008: (emphasis added) 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

(b) 

just b4 you beat me up .... I was in meeting so 

didn't do me libm·s today ... thk they put .52 for 

Is .... 

[Rabobank Senior Yen Trader] needs a high 

6m libor if u can help skip - asked me to set 

1.10 

oops my 6s is 1.15!!! he'll love me 

hahaha so di i! 

send him my regards the lovely fella .... 

morning skip- [Rabobank Senior Yen 

Trader] has asked me to set high libors today 

-gave me levels of lm 82, 3m 94 .... 6m 1.02 

sry mate can't oblige today ... I need em 

lower!!! 

yes was told by jimbo .. .just thought i'd let you 

know why mine will be higher ... and you don't 

get cross with me 

never get cross wiv yer mate 

The Lloyds TSB Yen LIBOR Submitter maintained his relationship with and sought to 

accommodate the Rabobank Yen LIBOR Submitter's requests, even when he was on assignment 

in Tokyo during a brief period in early 2007 and was no longer making the Lloyds TSB Yen 

LIBOR submissions. For example, on March 22, 2007, the Rabobank Yen LIBOR Submitter 

emailed the Lloyds TSB Yen Submitter requesting, "I need a high lmthjpy libor set tomorrow 

please (val 27th) if you can ask your man to set a nice high one like today pls? .... hugs skip." The 

Lloyds TSB Yen LIBOR Submitter forwarded the email to the two Lloyds TSB employees who 

were making the Lloyds TBS Yen LIBOR submissions in his absence and stated, "We usually 

try and help each other out. .. but only if it suits .. .! think this will be OK for us anyway as we 

may have some month end Loans Admin roll overs?" (emphasis added) 

Upon his return to London and resumption of his LIB OR submission duties, the Lloyds 

TSB Yen LIB OR Submitter received an internal request for a submission from a Lloyds TSB 

trader in Tokyo. The trader asked the Lloyds TSB Yen LIBOR Submitter on July 19, 2007 for a 

low three-month Yen LIB OR submission, observing that he had a position worth ¥83 billion that 

could benefit from an altered Yen LIBOR fixing. The Lloyds TSB Yen LIBOR Submitter 

agreed to assist him and even offered to ask the Rabobank Yen LIB OR Submitter to assist as 

well. 

On other occasions, the Lloyds TSB Yen LIB OR Submitter asked the Rabobank Yen 

LIBOR Submitter to adjust Rabobank's Yen LIBOR submissions to benefit the trading positions 

of the Lloyds TSB Yen LIBOR Submitter. The Rabobank Yen LIBOR Submitter typically 

12 
agreed to these requests. The following are examples of these coordinating communications 

with the Rabobank Yen LIB OR Submitter. 

June 27, 2006: (emphasis added) 

Lloyds TSB Yen Submitter: 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

Rabobank Yen Submitter: 

July 19, 2007: 

Lloyds TSB Yen Submitter: 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

January 7, 2008: (emphasis added) 

Lloyds TSB Yen Submitter: 

Rabobank Yen Submitter: 

Lloyds TSB Yen Submitter: 

mrng mate ... my turn today ... what u going 3s 

libor ... hoping for a higher one .... 0.35 or u 

think that is pushing it a bit? 

nope - fine with me mate -will set 35 for you 

(b) 

(K) cheers dude 

no prob at all mate ;) 

mrng beautiful.. .. .ifu can would love a low 

fixing in 3s libor today .... (y) 

ok skip- what u need? no prob 

. 77 if poss but just no higher than yest!! 

plse may i have a nice high lm libby 

today .. grovel grovel...(k). [ ... ] 

yes nice and toasty .... what would you like me to 

set for lm mate? i've gone 70 so far .... or 

hogher? 

thats fine .. thx lad xx 

From at least mid-2006 to at least October 2008, the Lloyds TSB Yen LIBOR Submitter 

attempted to manipulate Yen LIB OR fixings at times for the benefit of his own trading positions, 

Rabobank's trading positions, and the trading positions of a fellow Lloyds TSB trader. Lloyds 

TSB, through its submitter and trader, knew it was improper to consider its own or another panel 

bank's trading positions in determining the bank's LIBOR submissions. A panel bank's trading 

positions are not legitimate or permissible factors on which to base a bank's daily LIBOR 

submissions. By basing its LIBOR submissions on rates that benefited traders' trading positions, 

Lloyds TSB 's submissions were not made in accordance with the BBA definition and criteria for 

LIBOR submissions. To the contrary, Lloyds TSB conveyed false, misleading or knowingly 

inaccurate reports that its submitted rates for Yen LIB OR were based on and solely reflected the 

costs of borrowing unsecured funds in the relevant interbank markets. Accordingly, Lloyds TSB 

attempted to manipulate and knowingly delivered, or caused to be delivered, false, misleading, or 

knowingly inaccurate reports concerning Yen LIB OR, which is a commodity in interstate 

commerce. In a few instances, Lloyds TSB was successful in manipulating Yen LIBOR through 

the false and unlawful submissions. 

13 
6. Prior to Its Acquisition, HBOS Lowered Its U.S. Dollar and Sterling LIBOR 

Submissions to Protect Its Market Reputation 

During the global financial crisis in 2008, HBOS experienced serious funding and 

liquidity issues and was perceived by the market to be in financial trouble. By the middle of 

2008, certain HBOS managers recognized that market patiicipants viewed LIBOR submissions 

as a reflection of a panel bank's liquidity and financial viability. In response, the supervisor of 

the HBOS LIBOR submitters directed the submitters to make the bank's U.S. Dollar and Sterling 

LIBOR submissions at rates that ensured it would not be an outlier relative to the other panel 

banks' LIBOR submissions. Accordingly, from late 2008 through the end ofthe year, HBOS's 

U.S. Dollar and Sterling LIBOR submissions did not accurately or solely reflect or relate to 

HBOS' s assessment of the costs of borrowing funds in the relevant interbank markets. 

On April 16, 2008, the Wall Street Journal published an article questioning whether 

LIB OR panel banks were making LIB OR submissions lower than what they were actually 

paying for funds in the money markets to prevent the market from concluding that the banks 

were desperate for cash. The BBA, in response to this article, began an inquiry into the integrity 

of the LIBOR fixing. On May 6, 2008, an HBOS senior manager in an email to two other HBOS 

senior managers and other HBOS personnel, including the senior manager of the LIBOR 

submitters, reported that "it will be readily apparent that in the current environment no bank can 

be seen to be an outlier. The submissions of all banks are published and we could not afford to 

be significantly away from the pack." Later, on August 8, 2008, the same HBOS Senior 

Manager circulated to HBOS managers and senior managers a presentation in which he stated, 

inter alia, that: 

As a bank we are extremely careful about the rates we pay in different 

markets for different types of funds as paying too much risks not only 

causing a re-pricing of all short term borrowing but, more importantly in 

this climate, may give the impression of HBOS being a desperate 

borrower and so lead to a general withdrawal of wholesale lines. 

(emphasis added) 

The HBOS LIBOR submitters' supervisor ("HBOS LIBOR Supervisor") understood the 

importance of not being an outlier in LIBOR submissions. He noted in an August 29, 2008 

email to several HBOS LIBOR submitters that HBOS should not be a "material outlier," at least 

with respect to its Sterling and Euro LIBOR submissions. 

By the middle of September 2008, after Lehman Brothers collapsed, HBOS's financial 

difficulties worsened, and its share price plummeted. On September 18, 2008, Lloyds TSB 

announced the terms of an offer to acquire the struggling HBOS. This offer was generally 

understood by the market and by the HBOS LIB OR submitters and their supervisor to be a 

rescue of HBOS. 

Due to the financial crisis conditions and HBOS's worsening financial status, the HBOS 

U.S. Dollar LIBOR Submitter began to increase his U.S. Dollar LIBOR submissions because he 

believed his submitted rates represented a reasonable attempt to approximate the rates at which 

14 
HBOS would be able to borrow such funds. For example, on September 24, 2008, the HBOS 

U.S. Dollar LIBOR Submitter increased the three-month submission by 1.2% or 120 basis 

points, and on September 25, 2008, he increased it again by 35 basis points. HBOS's threemonth submission on September 25, 2008 was higher than any other panel bank's submission for 

that tenor. While the official U.S. Dollar LIBOR fixing was increasing over this period as well, 

HBOS's U.S. Dollar LIBOR submissions placed the bank at the top ofthe panel of submitting 

banks and made HBOS a clear outlier on the U.S. Dollar LIBOR panel. 

On September 26, 2008, after discussing the HBOS LIBOR submissions with more 

senior HBOS managers, the HBOS LIBOR Supervisor told the U.S. Dollar LIBOR Submitter 

that the U.S. Dollar LIBOR submissions should be lower relative to the other panel members and 

directed him to reduce the spread between the HBOS U.S. Dollar LIBOR submissions and the 

submissions of the other panel members. 

That same day, the HBOS U.S. Dollar LIBOR Submitter, in a chat with an employee of 

another financial institution, stated, "youll like this ive been pressured by senior management to 

bring my rates down into line with everyone else." Consistent with this directive from the 

HBOS LIBOR Supervisor, the HBOS U.S. Dollar LIBOR Submitter substantially reduced his 

three-month U.S. Dollar LIBOR submissions by 55 basis points on September 26, 2008. 

As the financial crisis for the market- and for HBOS specifically- deepened through 

the last quarter of 2008, the HBOS Sterling LIB OR Submitter also began increasing his 

submissions, until on October 21, 2008, the HBOS Sterling LIBOR submissions became the 

highest submissions of all other panel bank members in the one through six-month tenors. That 

day, the HBOS LIBOR Supervisor transmitted a directive to the HBOS Sterling LIBOR 

submitters, stating "I do not want to be an outlier in BBA submissions - this could potentially 

create an issue with buyers of our paper." Accordingly, he instructed the submitters to submit 

"3-6 month" Sterling LIBOR "at the expected BBA level for the time being." He copied his 

supervisor, the senior manager of the LIBOR submitters, on this email, and, later that day, his 

supervisor replied stating, "Agree with this." 

By this directive, the HBOS LIBOR Supervisor intended the Sterling LIBOR submitters 

to make submissions based on where they believed most other banks would make their 

submissions or where Sterling LIBOR would be fixed. This was inconsistent with the BBA 

definition that required submissions based on the rates at which HBOS had been able to borrow 

or believed it could borrow Sterling at 11 a.m. in London. HBOS wanted its LIBOR 

submissions to be at or around the Sterling LIBOR fixing to avoid frightening away potential 

"buyers of [HBOS] paper." Such buyers might not have been willing to lend money to HBOSor might have demanded higher rates- had HBOS' s Sterling LIB OR submissions reflected the 

actual rate at which HBOS believed it could borrow. 

· The HBOS Sterling LIBOR submitters followed this directive by reducing HBOS 

Sterling LIBOR submissions significantly over a period of several days. For example, on 

October 22, 2008, the day after the HBOS LIBOR Supervisor issued the directive, the HBOS 

Sterling LIBOR submissions for one-month through six-month tenors declined substantially, 

15 
specifically by 18 basis points in the one, two and six-month tenors, and 20 to 25 basis points in 

the three, four and five-month tenors. 

During this period, the HBOS LIBOR submitters also received instructions from the 

HBOS LIBOR Supervisor, consistent with the message delivered by the HBOS Senior Manager 

in August 2008, that they normally should not make bids for cash in the market above the rate of 

the daily LIBOR fixing. Then, on October 30, 2008, the HBOS LIBOR Supervisor told the 

submitters in an email (again copying his supervisor) that they should not make LIBOR 

submissions based on "the expectation ofwhere funds will come" but should instead "continue 

to post levels at or slightly above the level we will pay for deposits or issue [certificates of 

deposit]." In other words, in order to avoid a market perception that HBOS was a desperate 

borrower of funds, the HBOS LIB OR submitters were instructed to make submissions consistent 

with the rate at which HBOS bid for funds in the market (i.e., the rate of the LIBOR fixing) 

rather than at the rate HBOS was offered funds. This instruction reinforced the HBOS LIBOR 

Supervisor's directive that HBOS should not be an outlier in its U.S. Dollar and Sterling LIBOR 

submissions. 

For the remainder of 2008 through to the acquisition of HBOS in January 2009, the 

HBOS LIBOR Supervisor did not withdraw the directives to the HBOS U.S. Dollar and Sterling 

LIBOR submitters, or instruct them to begin making submissions based on the rate at which 

HBOS could borrow or were offered funds in the interbank money market. As a result, the 

HBOS U.S. Dollar and Sterling LIBOR submitters continued to follow these directives. 

Accordingly, from late 2008 through the end of the year, HBOS's U.S. Dollar and Sterling 

LIBOR submissions did not accurately or solely reflect or relate to HBOS's assessment ofthe 

costs of borrowing funds in the relevant interbank markets. 

During the last few months of2008, HBOS lowered its submissions for U.S. Dollar and 

Sterling LIBOR in order to manage market perceptions and preserve its ability to raise funds 

from other market participants. During this period, HBOS made U.S. Dollar and Sterling 

LIBOR submissions that did not reflect the rate at which HBOS could borrow in the relevant 

markets, but instead reflected its desire to avoid being seen as an outlier on the respective 

LIBOR panels. By skewing its U.S. Dollar and Sterling LIBOR submissions, HBOS conveyed 

false, misleading or knowingly inaccurate reports that its submitted rates for U.S. Dollar and 

Sterling LIB OR were based on and solely reflected the costs of borrowing unsecured funds in the 

relevant interbank markets. Accordingly, HBOS knowingly delivered, or caused to be delivered, 

false, misleading or knowingly inaccurate reports concerning U.S. Dollar and Sterling LIBOR, 

which are commodities in interstate commerce. 

7. Lloyds TSB and HBOS Attempted to Manipulate Sterling LIBOR to Benefit 

Their Respective Trading Positions 

In September, October, and December of 2006 Lloyds TSB Sterling LIB OR submitters 

engaged in a trading strategy to manipulate the one-month tenor for Sterling LIBOR in order to 

increase the profitability of certain Lloyds TSB forward rate agreements ("FRAs") positions. 

16 
The Lloyds TSB Sterling LIBOR Submitter and back-up Submitter entered into onemonth Sterling FRAs that would benefit if the one-month Sterling LIBOR fixing on the 

settlement date of the positions was higher than the fixed rate at the start of the contracts. Prior 

to the relevant LIBOR fixing date, the Lloyds TSB Sterling LIBOR submitters increased the 

price of their bids for one-month Sterling cash in the money market in an attempt to increase the 

one-month Sterling LIBOR fixing. The Lloyds TSB Sterling LIBOR submitters believed that 

other panel banks would factor in these higher-priced bids (and any resulting transactions) when 

making their Sterling LIB OR submissions, and, as a result, cause the Sterling LIB OR fixing to 

increase as well. The submitters' primary purpose and intent in making the increased bids was to 

drive the one-month Sterling LIBOR fixing higher in order to benefit the Lloyds TSB FRA 

positions and not to obtain funding for the bank. 

An HBOS Sterling LIBOR Submitter also entered into a similar strategy in late 2006, and 

placed higher bids in the cash market for three-month Sterling in an improper attempt to 

manipulate the three-month Sterling LIBOR fixing to benefit an HBOS money market cash 

trading position. 

IV. 

LEGAL DISCUSSION 

A. Respondents, by and Through Lloyds TSB and HBOS, Made False, Misleading or 

Knowingly Inaccurate Reports Concerning the Costs of Borrowing Unsecured 

Funds in Violation of Section 9(a)(2) of the Act 

Section 9(a)(2) of the Act makes it unlawful for any person "knowingly to deliver or 

cause to be delivered for transmission through the mails or interstate commerce by telegraph, 

telephone, wireless, or other means of communication false or misleading or knowingly 

inaccurate reports concerning crop or market information or conditions that affect or tend to 

affect the price of any commodity in interstate commerce .... " 7 U.S.C. § 13(a)(2) (2006); 

United States v. Brooks, 681 F.3d 678, 691 (5th Cir. 2012); United States v. Valencia, 394 F.3d 

352,354-55 (5th Cir. 2004); see also CFTCv. Johnson, 408 F. Supp. 2d 259,267 (S.D. Tex. 

2005). 

Respondents, by and through Lloyds TSB and HBOS, through the transmission of their 

daily submissions to Thomson Reuters, the service provider ofthe BBA, who calculated their 

official fixings, knowingly delivered or caused to be delivered its Sterling and U.S. Dollar 

LIBOR submissions through the mails or interstate commerce. Lloyds TSB, also through the 

transmission of its daily submissions, knowingly delivered or caused to be delivered Yen LIB OR 

submissions through the mails or interstate commerce. The submissions of Lloyds TSB and 

HBOS were also caused to be delivered through the mails or interstate commerce through the 

daily dissemination and publication globally, including into the United States, of the panel 

banks' submissions as well as the daily official benchmark interest rates by Thomson Reuters on 

behalf of the BBA, and other third party vendors. The panel banks' submissions are used to 

determine the official published rates for LIBOR which are calculated based on a trimmed 

average ofthe submissions. Lloyds TSB's and HBOS's daily LIBOR submissions contained 

market information concerning the costs of borrowing unsecured funds in particular currencies 

17 
and tenors, the liquidity conditions and stress in the money markets, and Lloyds TSB's and 

HBOS's ability to borrow funds in the particular markets. Such market information affects or 

tends to affect the prices of commodities in interstate commerce, including the daily rates at 

which Sterling, U.S. Dollar, and Yen LIBOR are fixed. 

At times, during the periods relevant to the conduct described herein, Lloyds TSB' s and 

HBOS's submissions for certain tenors of Sterling and U.S. Dollar LIBOR, and Lloyds TSB's 

submissions for certain tenors of Yen LIB OR, were false, misleading or knowingly inaccurate 

because they were based in whole or in part on impermissible and illegitimate factors, including 

the trading positions of Lloyds TSB and HBOS submitters and traders and, at times, of 

Rabobank traders, and, for HBOS, a manager's directives regarding the levels at which the 

bank's Sterling and U.S. Dollar LIBOR submissions should be made. By using these 

impermissible and illegitimate factors in making their LIB OR submissions, Respondents, by and 

through Lloyds TSB and HBOS, conveyed false, misleading or knowingly inaccurate 

information that the rates they submitted were based on and related solely to the costs of 

borrowing unsecured funds in the relevant markets and were truthful and reliable. Moreover, 

Lloyds TSB and HBOS submitters, traders, and certain managers knew that certain Lloyds TSB 

and HBOS LIBOR submissions contained false, misleading and knowingly inaccurate 

information concerning the submitted rates. By such conduct, Respondents violated Section 

9(a)(2) of the Act, 7 U.S.C. § I 3(a)(2) (2006). 

B. Respondents, by and Through Lloyds TSB, in a Few Instances Successfully 

Manipulated Sterling and Yen LIBOR for Certain Tenors 

Together, Sections 6(c), 6(d) and 9(a)(2) of the Act prohibit acts of manipulation or 

attempted manipulation. Section 9(a)(2) of the Act makes it unlawful for "[a]ny person to 

manipulate or attempt to manipulate the price of any commodity in interstate commerce, or for 

future delivery on or subject to the rules of any registered entity .... " 7 U.S.C. § 13(a)(2) 

(2006). Section 6(c) of the Act authorizes the Commission to serve a complaint and provide for 

the imposition of, among other things, civil monetary penalties and cease and desist orders if the 

Commission "has reason to believe that any person ... is manipulating or attempting to 

manipulate or has manipulated or attempted to manipulate the market price of any commodity, in 

interstate commerce, or for future delivery on or subject to the rules of any registered entity, ... 

or otherwise is violating or has violated any of the provisions of [the] Act .... " 7 U.S.C. § 9 

(2006). Section 6(d) of the Act is substantially identical to Section 6(c). See 7 U.S.C. § 13b 

(2006). 

Manipulation under the Act is the "intentional exaction of a price determined by forces 

other than supply or demand." Frey v. CFTC, 931 F.2d 1171, 1175 (7th Cir. 1991). The 

following four elements must be met, by a preponderance of the evidence, to show a successful 

manipulation has occurred: 

(1) the [respondent] had the ability to influence market prices; 

(2) the [respondent] specifically intended to do so; 

(3) artificial prices existed; and 

(4) the [respondent] caused an artificial price. 

18 
In re Cox, [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 23,786, at 34,061 (CFTC 

July 15, 1987). The test for manipulation, however, is a practical one: 

We think the test of manipulation must largely be a practical one if the 

purposes of the Commodity Exchange Act are to be accomplished. The 

methods and techniques of manipulation are limited only by the ingenuity 

of man. The aim must be therefore to discover whether conduct has been 

intentionally engaged in which has resulted in a price which does not 

reflect basic forces of supply and demand. 

Cargill v. Hardin, 452 F.2d 1154, 1163 (8th Cir. 1971). 

"[I]ntent is the essence of manipulation." Indiana Farm Bureau Cooperative Ass'n, Inc., 

[1982-1984 Transfer Binder] Comm. Fut: L. Rep (CCH) ~ 21,796, at 27,282 (CFTC Dec. 17, 

1982). The manipulator's intent separates "lawful business conduct from unlawful manipulative 

activity." Id. at 27,283. To prove the intent element of manipulation, it must be shown that the 

Respondent "acted (or failed to act) with the purpose or conscious object of causing or effecting 

a price or price trend in the market that did not reflect the legitimate forces of supply and 

demand." Id. 

The Commission has observed that "intent must of necessity be inferred from the 

objective facts and may, of course, be inferred by a person's actions and the totality ofthe 

circumstances." In re Hohenberg Bros., [1975-1977 Transfer Binder] Comm. Fut. L. Rep. 

(CCH) ~ 20,271, at 21,477 (CFTC Feb. 18, 1977). "[O]nce it is demonstrated that the alleged 

manipulator sought, by act or omission, to move the market away from the equilibrium or 

efficient price- the price which reflects market forces of supply and demand -the mental 

element of manipulation may be inferred." Indiana Farm Bureau Cooperative Ass 'n, Inc., 

~ 21,796, at 27,283. "It is enough to present evidence from which it may reasonably be inferred 

that the accused 'consciously desire[ d) that result, whatever the likelihood of that result 

happening from his conduct."' Id. (quoting United States v. United States Gypsum Co., 438 U.S. 

442, 445 (1978)). A profit motive may also be evidence of intent, although profit motive is not a 

necessary element of an attempted manipulation. See In re DiPlacido [2007-2009 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ~ 30,970, at 62,484 (CFTC Nov. 5, 2008) (citing In re 

Hohenberg Bros. Co., (CCH) ~ 20,271, at 21,478)), aff'd, 364 Fed. Appx. 657 (2d Cir. 2009). 

An artificial price (also termed a "distmied" price) is one "that does not reflect market or 

economic forces of supply and demand." In re Cox,~ 23,786, at 34,064; Indiana Farm Bureau 

Cooperative Ass 'n, Inc.,~ 21,796, at 27,288 n. 2. As the Commission noted with approval in 

DiPlacido, ~ 30,970, at 62,484 (quoting Indiana Farm Bureau Cooperative Ass'n, Inc.,~ 21,796, 

at 27,300 (Commissioner Stone concurring)), a Commissioner has commented: "[t]his is more an 

axiom than a test." In determining whether an artificial price has occurred: 

[O]ne must look at the aggregate forces of supply and demand and search 

for those factors which are extraneous to the pricing system, are not a 

legitimate part of the economic pricing ofthe commodity, or are extrinsic 

19 
to that commodity market. When the aggregate forces of supply and 

demand bearing down on a pmiicular market are all legitimate, it follows 

that the price will not be artificial. On the other hand when a price is 

effected by a factor which is not legitimate, the resulting price is 

necessarily artificial. Thus, the focus should not be as much on the 

ultimate price as on the nature ofthe factors causing it. 

Indiana Farm Bureau Cooperative Ass'n, Inc.,~ 21,796, at 27,288 n.2. See also In re DiPlacido, 

~ 30,970, at 62,484 (finding that the placement of uneconomic bids or offers results in artificial 

prices because those prices are not determined by the free forces of supply and demand on the 

exchange). 

Causation of artificial prices is established when it is demonstrated that artificial market 

prices resulted from the conduct of a trader, or group of traders acting in concert, rather than 

legitimate forces of supply and demand. See Cargill, Inc. v. Hardin, 452 F .2d 1154, 1171-72 

(8th Cir. 1971) (price squeeze "intentionally brought about and exploited by Cargill"); In re Cox, 

~ 23,786, at 34,067 (proof of causation requires the Division to show that "the respondents' 

conduct 'resulted in' artificial prices"). 

There can be multiple causes of an artificial price. In re DiPlacido, ~ 30,970, at 62,485. 

The manipulator's actions need not be the sole cause ofthe atiificial price. "It is enough for 

purposes of a finding of manipulation in violation of Sections 6(b) and 9 of the Act that 

respondents' action contributed to the price [movement]." In re Kosuga, 19 A.D. 603, 624 

(1960); see also In re Cox,~ 23,786, at 34,066 (recognizing there can be multiple causes of an 

artificial price and holding that a charge of manipulation can be sustained where respondents' 

acts are a proximate cause of the miificial price). 

Here, as a member of the BBA's Sterling and Yen LIBOR panels, Lloyds TSB made 

daily submissions that purported to reflect its assessments of the costs of borrowing unsecured 

funds in the London interbank market for Sterling and Yen across tenors. The official LIBOR 

fixings are calculated using a trimmed average methodology applied to the rates submitted by the 

panel banks. By virtue of this methodology, Lloyds TSB had the ability to influence or affect the 

rate that would become the official Sterling and Yen LIBOR for any tenor. 

As evidenced by the communications and other facts set forth above, in making the false 

Sterling and Yen LIBOR submissions, the Lloyds TSB Sterling and Yen LIBOR submitters 

specifically intended to affect the daily Sterling and Yen LIBOR for certain tenors, including the 

one-month and three-month tenors. Their intent is also made clear by the evidence that their 

motives were to benefit the Lloyds TSB and Rabobank Yen LIBOR-based trading positions. 

In a few instances, Lloyds TSB's false, misleading or knowingly inaccurate Sterling and 

Yen LIBOR submissions were illegitimate factors in the pricing of the daily Sterling and Yen 

LIBOR fixings and affected the official Sterling and Yen LIB OR for certain tenors, resulting in 

artificial Sterling and Yen LIBOR fixings. Thus, Lloyds TSB's actions were a proximate cause 

ofthe artificial Sterling and Yen LIBOR fixings. 

20 
Accordingly, in a few instances, Respondents, by and through Lloyds TSB, manipulated 

Sterling and Yen LIBOR for certain tenors, commodities in interstate commerce, in violation of 

Sections 6(c), 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006). 

C. Respondents, by and Through Lloyds TSB and HBOS, Attempted to Manipulate 

Sterling and U.S. Dollar LIBOR, and also Attempted to Manipulate Yen LIBOR by 

and Through Lloyds TSB 

To prove attempted manipulation, two elements are required: (1) an intent to affect the 

market price; and (2) an overt act in furtherance of that intent. See In re Hohenberg Bros. Co. 

~ 20,271, at 21,477; CFTC v. Bradley, 408 F. Supp. 2d 1214, 1220 (N.D. Okla. 2005). The 

intent standard is the same as that for manipulation. See Indiana Farm Bureau and Hohenberg 

Bros., supra. 

As found above, Lloyds TSB and HBOS submitters specifically intended to affect the 

rate at which the daily LIBOR for Sterling, U.S. Dollar and Yen would be fixed to benefit their 

and other traders' cash and derivatives trading positions, and, at times, with respect to Yen 

LIBOR submissions by Lloyds TSB's submitters, to benefit the trading positions of traders at 

Rabobank. When the Lloyds TSB and HBOS submitters made LIBOR submissions in a manner 

that would benefit trading positions, those submissions constituted overt acts in furtherance of 

their intent to affect the fixings ofLIBOR for various currencies. When the Lloyds TSB and 

HBOS submitters knowingly increased bids for Sterling in the money markets that were higher 

in price than they otherwise would have paid, the higher-priced bids constituted overt acts in 

furtherance their attempts to affect the fixing of Sterling LIB OR. By doing so, Respondents, by 

and through Lloyds TSB and HBOS, engaged in multiple acts of attempted manipulation in 

violation of Sections 6(c), 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006). 

D. Respondents, by and Through Lloyds TSB, Aided and Abetted the Attempts of 

Traders at Rabobank to Manipulate Yen LIBOR 

Pursuant to Section 13(a) of the Act, the Lloyds TSB Yen LIBOR submitter aided and 

abetted the attempts of traders at Rabobank to manipulate Yen LIB OR. 7 U.S.C. § 13c(a) 

(2006). Liability as an aider and abettor requires proof that: (1) the Act was violated; (2) the 

aider and abettor had knowledge of the wrongdoing underlying the violation; and (3) the aider 

and abettor intentionally assisted the primary wrongdoer. See In re Nikkhah, [1999-2000 

Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 28,129, at 49,888 n.28 (CFTC May 12, 2000). 

Although actual knowledge of the primary wrongdoer's conduct is required, knowledge of the 

unlawfulness of such conduct need not be demonstrated. See In re Lincolnwood Commodities, 

Inc., [1982-1984 Transfer Binder] Comm. Fut. L. Rep. (CCH) ~ 21,986, at 28,255 (CFTC Jan. 

31, 1984). Knowing assistance can be inferred from the surrounding facts and circumstances. 

I d. 

As evidenced by the communications set forth above, the Lloyds TSB Yen LIB OR 

submitter coordinated with the Rabobank Yen Submitter to make Yen LIB OR submissions that 

would benefit their respective banks' trading positions. Accordingly, by seeking to affect the 

rates at which Yen LIBOR were fixed, the traders at Rabobank on these occasions attempted to 

21 
manipulate Yen LIBOR, in violation of Sections 6(c), 6(d) and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 

13b and 13(a)(2) (2006). The Lloyds TSB Yen LIBOR submitter had knowledge of and 

intentionally assisted these attempts to manipulate Yen LIBOR. By the acts ofthe Lloyds TSB 

Yen LIBOR submitter, Respondents, by and through Lloyds TSB and HBOS, aided and abetted 

the attempts of traders at Rabobank to manipulate Yen LIB OR in violation of Sections 6( c), 6( d), 

and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b, and 13(a)(2) (2006). 

E. Lloyds Banking Group pic and Lloyds Bank pic Are Liable for the Acts of Their 

Agents 

Section 2(a)(1)(B) of the Act, 7 U.S.C. § 2(a)(l)(B), and Regulation 1.2, 17 C.P.R.§ 1.2 

(20 12), provide that the act, omission or failure of any official, agent or other person acting for 

any individual, association, partnership, corporation or trust within the scope of his employment 

or office shall be deemed the act, omission or failure of such individual, association, partnership, 

corporation or trust. Pursuant to Section 2(a)(l)(B) of the CEA and Commission Regulation 1.2, 

strict liability is imposed on principals for the actions of their agents. See, e.g., Rosenthal & Co. 

v. CFTC, 802 F.2d 963, 966 (7th Cir. 1986); Dohmen-Ramirez & Wellington Advisory, Inc. v. 

CFTC, 837 F.2d 847, 857-58 (9th Cir. 1988). 

Lloyds Banking Group pic and Lloyds Bank pic are liable for the acts, omissions and 

failures of the traders, managers and submitters who acted as their employees and/or agents or 

the employees and/or agents of their subsidiaries in the conduct described above and 

accordingly, violated Sections 6(c), 6(d) and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) 

(2006), as set fotih above. 

v. 

FINDINGS OF VIOLATIONS 

Based on the foregoing, the Commission finds that Respondents violated Sections 6( c), 

6(d) and 9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006). 

VI. 

OFFER OF SETTLEMENT 

Respondents, without admitting or denying the findings or conclusions herein, except to 

the extent Respondents admit those findings in any related action against Respondents by, or any 

agreement with, the Department of Justice or any other governmental agency or office, have 

submitted the Offer in which they: 

A. Acknowledge receipt of service of this Order; 

B. Admit the jurisdiction of the Commission with respect to all matters set forth in this 

Order and for any action or proceeding brought or authorized by the Commission based 

on violation of or enforcement of this Order; 

22 
C. Waive: 

1. the filing and service of a complaint and notice of hearing; 

2. a hearing; 

3. all post-hearing procedures; 

4. judicial review by any court; 

5. any and all objections to the participation by any member of the Commission's 

staff in the Commission's consideration of the Offer; 

6. any and all claims that Respondents may possess under the Equal Access to Justice 

Act, 5 U.S.C. § 504 (2006) and 28 U.S.C. § 2412 (2006), and/or the rules 

promulgated by the Commission in conformity therewith, Part 148 of the 

Commission Regulations, 17 C.F .R. § § 148.1-30 (20 13 ), relating to, or arising 

from, this proceeding; 

7. any and all claims that Respondents may possess under the Small Business 

Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, §§ 201-253, 

110 Stat. 847, 857-868 (1996), as amended by Pub. L. No. 110-28, § 8302, 121 

Stat. 112, 204-205 (2007), relating to, or arising from, this proceeding; and 

8. any claims of Double Jeopardy based on the institution of this proceeding or the 

entry in this proceeding of any order imposing a civil monetary penalty or any 

other relief; 

D. Stipulate that the record basis on which this Order is entered shall consist solely ofthe 

findings contained in this Order to which Respondents have consented in the Offer; and 

E. Consent, solely on the basis of the Offer, to the Commission's entry of this Order that: 

1. makes findings by the Commission that Respondents violated Section 6( c), 6( d) 

and 9(a)(2) ofthe Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006); 

2. orders Respondents to cease and desist from violating Sections 6( c), 6( d) and 

9(a)(2) of the Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006); 

3. orders Respondents to pay a civi I monetary penalty in the amount of One 

Hundred Five Million U.S. Dollars ($105,000,000) plus post-judgment interest; 

and 

23 
4. orders Respondents and their successors and assigns to comply with the 

conditions and undertakings consented to in the Offer and as set forth in Part VII 

ofthis Order. 

Upon consideration, the Commission has determined to accept the Offer. 

VII. 

ORDER 

Accordingly, IT IS HEREBY ORDERED THAT: 

A. Respondents shall cease and desist from violating Sections 6( c), 6( d) and 9(a)(2) of the 

Act, 7 U.S.C. §§ 9, 13b and 13(a)(2) (2006) ofthe Act. 

B. Respondents, jointly and severally, shall pay a civil monetary penalty of One Hundred 

Five Million Dollars ($105,000,000) within ten (10) days ofthe date of entry ofthis 

Order (the "CMP Obligation"). 11 If the CMP Obligation is not paid in full within ten (1 0) 

days of the date of entry of this Order, then post-judgment interest shall accrue on the 

CMP Obligation beginning on the date of entry of this Order and shall be determined by 

using the Treasury Bill rate prevailing on the date of entry of this Order pursuant to 28 

U.S.C. § 1961 (2006). Respondents shall pay the CMP Obligation by electronic funds 

transfer, U.S. postal money order, certified check, bank cashier's check, or bank money 

order. If payment is to be made other than by electronic funds transfer, then the payment 

shall be made payable to the Commodity Futures Trading Commission and sent to the 

address below: 

Commodity Futures Trading Commission 

Division of Enforcement 

ATTN: Accounts Receivables 

DOT IF AA/MMAC/ AMZ-341 

CFTC/CPSC/SEC 

6500 S. MacArthur Blvd. 

Oklahoma City, OK 73169 

( 405) 954-7262 office 

( 405) 954-1620 fax 

nikld.gibson@faa.gov 

If payment is to be made by electronic funds transfer, Respondents shall contact Nikki 

Gibson or her successor at the above address to receive payment instructions and shall 

fully comply with those instructions. Respondents shall accompany payment of the CMP 

Obligation with a cover letter that identifies the paying Respondents and the name and 

docket number of this proceeding. The paying Respondents shall simultaneously 

11 Effective June 18, 2008, the Act imposes a $1,000,000 civil monetary penalty for each act of 

attempted and completed manipulation in violation of the Act. Certain of Respondents' violations of the 

Act for attempted and completed manipulation occurred after June 18, 2008. 

24 
transmit copies of the cover letter and the form of payment to the Chief Financial Officer, 

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, 

Washington, D.C. 20581. 

C. Respondents and their successors and assigns shall comply with the following conditions 

and undertakings set forth in the Offer. Respondents represent that they have already 

undetiaken and implemented, or are implementing certain compliance and supervisory 

controls or enhancements consistent with these Undertakings: 

1. PRINCIPLES 12 

i. Respondents agree to undertake the following: (1) to ensure the integrity 

and reliability of their Benchmark Interest Rate Submission(s), presently 

and in the future; and (2) to identify, construct and promote effective 

methodologies and processes of setting Benchmark Interest Rates, in 

coordination with efforts by Benchmark Publishers, in order to ensure the 

integrity and reliability of Benchmark Interest Rates in the future. 

ii. Respondents represent and undertake that each Benchmark Interest Rate 

Submission by Respondents shall be based upon a rigorous and honest 

assessment of information, and shall not be influenced by internal or 

external conflicts of interest, or other factors or information extraneous to 

any rules applicable to the setting of a Benchmark Interest Rate. 

2. INTEGRITY AND RELIABILITY OF BENCHMARK INTEREST RATE 

SUBMISSIONS 

t. DETERMINATION OF SUBMISSIONS: Respondents shall determine 

their Submission(s) based on the following Factors, Adjustments and 

Considerations, unless otherwise prohibited by or contrary to an 

affirmative obligation imposed by any law or regulation, or the rules or 

12 The following terms are defined as follows: 

Benchmark Interest Rate: An interest rate for a currency and maturity/tenor that is calculated 

based on data received from market participants and published to the market on a regular, 

periodic basis, such as LIBOR and Euribor; 

Benchmark Publisher: A banking association or other entity that is responsible for or oversees 

the calculation and publication of a Benchmark Interest Rate; 

Submission(s): The interest rate(s) submitted for each currency and maturity/tenor to a 

Benchmark Publisher. For example, if Respondents submit a rate for one-month and three-month 

U.S. Dollar LIBOR, that would constitute two Submissions; 

Submitter(s): The person(s) responsible for determining and/or transmitting the Submission(s); 

and 

Supervisor(s): The person(s) immediately and directly responsible for supervising any portion of 

the process of Submission(s) and/or any of the Submitter(s). 

25 
definitions issued by a Benchmark Publisher. Respondents' transactions 

shall be given the greatest weight in determining their Submissions, 

subject to applying appropriate Adjustments and Considerations in order 

to reflect the market measured by the Benchmark Interest Rate. 13 

Respondents shall determine their Submissions as described in these 

Undertakings within fourteen (14) days ofthe entry of this Order. 

11 Factor 1 -Respondents' Borrowing or Lending Transactions 

Observed by Respondents' Submitters: 

a. Respondents' transactions in the market as defined by the 

Benchmark Publisher for the particular Benchmark Interest 

Rate; 

b. Respondents' transactions in other markets for unsecured 

funds, including, but not limited to, cetiificates of deposit 

and issuances of commercial paper; and 

c. Respondents' transactions in various related markets, 

including, but not limited to, Overnight Index Swaps, 

foreign currency forwards, repurchase agreements, futures, 

and Fed Funds. 

11 Factor 2- Third Party Transactions Observed by Respondents' 

Submitters: 

a. Transactions in the market as defined by the Benchmark 

Interest Rate relevant to each of the Submission(s); 

b. Transactions in other markets for unsecured funds, 

including, but not limited to, certificates of deposit and 

issuances of commercial paper; and 

c. Transactions in various related markets, including, but not 

limited to, Overnight Index Swaps, foreign currency 

forwards, repurchase agreements, futures, and Fed Funds. 

13 The rules used by Benchmark Publishers to determine Benchmark Interest Rates vary, may not be 

consistent with each other, and provide different levels of guidance as to how to make Submissions. 

26 
• Factor 3- Third Patty Offers Observed by Respondents' 

Submitters: 

a. Third party offers to Respondents in the market as defined 

by the Benchmark Publisher relevant to each of the 

Submission(s); 

b. Third party offers in other markets for unsecured funds, 

including, but not limited to, certificates of deposit and 

issuances of commercial paper, provided to Respondents by 

interdealer brokers (e.g., voice brokers); and 

c. Third party offers provided to Respondents in various 

related markets, including, but not limited to, Overnight 

Index Swaps, foreign currency forwards, repurchase 

agreements, and Fed Funds. 

• Adjustments and Considerations: All ofthe following 

Adjustments and Considerations may be applied with respect to 

each of the Factors above: 

a. Time: With respect to the Factors considered above, 

proximity in time to the Submission(s) increases the 

relevance of that Factor; 

b. Market Events: Respondents may adjust their 

Submission(s) based upon market events, including price 

variations in related markets, that occur prior to the time at 

which the Submission(s) must be made to the Benchmark 

Publisher. That adjustment shall reflect measurable effects 

on transacted rates, offers or bids; 

c. Term Structure: As Respondents apply the above Factors, 

if Respondents have data for any maturity/tenor described 

by a Factor, then Respondents may interpolate or 

extrapolate the remaining maturities/tenors from the 

available data; 

d. Credit Standards: As Respondents apply the above Factors, 

adjustments may be made to reflect Respondents' credit 

standing and/or the credit spread between the market as 

defined by the Benchmark Publisher and transactions or 

offers in the related markets used in the Factors above. 

Additionally, Respondents may take into account 

counterparties' credit standings, access to funds, and 

27 
borrowing or lending requirements, and third party offers 

considered in connection with the above Factors; and 

e. Non-representative Transactions: To the extent a 

transaction included among the Factors above significantly 

diverges in an objective manner from other transactions, 

and that divergence is not due to market events as 

addressed above, Respondents may exclude such 

transactions from the determination oftheir Submission(s). 

u. SUPERVISOR(S) REVIEW: Effective within fourteen (14) days ofthe 

entry ofthis Order, each daily Submission shall be reviewed by a 

Supervisor on a daily basis after the Submission(s) are made to the 

Benchmark Publisher. 

iii. QUALIFICATIONS OF SUBMITTER(S) AND SUPERVISOR(S): All 

Submitter(s) shall have significant experience in the markets for the 

Benchmark Interest Rate to which they are submitting or a comparable 

market, but may designate less experienced parties, who routinely work 

under their supervision, to make Submission(s) during limited periods of 

absence. All Supervisors shall have significant experience in the markets 

for the relevant Benchmark Interest Rate or a comparable market. 

Submitters, Supervisors and any pmiies designated to make Submission(s) 

when the Submitter(s) are absent shall not be assigned to any derivatives 

trading desk, unit or division within Respondents, or participate in 

derivatives trading other than that associated with Respondents' liquidity 

and liability management. The compensation of Submitter(s) and 

Supervisor(s) also shall not be directly based upon derivatives trading, 

other than that associated with Respondents' liquidity and liability 

management. 

IV. FIREWALLS: INTERNAL CONTROLS REGARDING IMPROPER 

COMMUNICATIONS AND SUBMISSIONS: Respondents shall 

implement internal controls and procedures to prevent improper 

communications with Submitter(s) and Supervisor(s) regarding 

Submission(s) or prospective Submission(s) to ensure the integrity and 

reliability of their Submission(s). Such internal controls and procedures 

shall include, but not be limited to: 

• The "firewalls" contemplated herein will be implemented through 

written policies and procedures that delineate proper and improper 

communications with Submitter(s) and Supervisor(s), whether 

internal or external to Respondents. For these purposes, improper 

communications shall be any attempt to influence Respondents' 

Submission(s) for the benefit of any derivatives trading position 

(whether of Respondents or any third party) or any attempt to 

28 
cause Respondents' Submitter(s) to violate any applicable 

Benchmark Publisher's rules or definitions, or Section 2 of these 

Undertakings; and 

• A requirement that the Submitter(s) shall not be located in close 

proximity to traders who primarily deal in derivatives products that 

reference a Benchmark Interest Rate to which Respondents 

contribute any Submission(s). The two groups should be separated 

such that neither can hear the other. 

v. DOCUMENTATION: Respondents shall provide the documents set forth 

below promptly and directly to the Commission upon request, without 

subpoena or other process, regardless of whether the records are held 

outside of the United States, to the extent permitted by law. 

• For each Submission, Respondents shall contemporaneously 

memorialize, and retain in an easily accessible format for a period 

of five ( 5) years after the date of each Submission, the following 

information: 

a. The Factors, Adjustments and Considerations described in 

Section 2(i) above that Respondents used to determine their 

Submission(s), including, but not limited to, identifying any 

non-representative transactions excluded from the 

determination of the Submission(s) and the basis for such 

exclusions, as well as identifying all transactions given the 

greatest weight or considered to be the most relevant, and 

the basis for such conclusion; 

b. All models or other methods used in determining 

Respondents' Submission(s), such as models for credit 

standards and/or term structure, and any adjustments made 

to the Submission(s) based on such models or other 

methods; 

c. Relevant data and information received from interdealer 

brokers used in connection with determining Respondents' 

Submission(s) including, but not limited to, the following: 

• Identification of the specific offers and bids relied 

upon by Respondents when determining each 

Submission; and 

• The name of each company and person from whom 

the information or data is obtained; 

29 
d. Respondents' assessment of "reasonable market size" for 

their Submission( s) (or any other such criteria for the 

relevancy of transactions to a Benchmark Interest Rate), to 

the extent that the rules for a Benchmark Interest Rate 

require that pertinent transactions considered in connection 

with Submission(s) be of"reasonable market size" (or any 

other such criteria); 

e. Information regarding market events considered by 

Respondents in connection with determining their 

Submission(s), including, without limitation, the following: 

• The specific market announcement(s) or event(s); 

and 

• Any effect of such market event(s) on transacted 

rates, offers or bids in the relevant markets; and 

f. The identity ofthe Submitter(s) who made, and the 

Supervisor(s) who reviewed, the Submission(s). 

• For each Submission, Respondents shall retain for a period of five 

(5) years after the date of each Submission, the following 

transactional data used by Respondents to determine their 

Submission(s); the data shall be easily accessible and convertible 

into Microsoft Excel file format; the data shall include, without 

limitation, the following to the extent known to Respondents at the 

time ofthe Submission(s): 

a. Instrument; 

b. Maturity/tenor; 

c. Trade type (i.e., loan/deposit, placing/taking); 

d. Buy/sell indicator; 

e. Transaction date (in mmddyyyy or ddmmyyyy format); 

f. Maturity date (in mmddyyyy or ddmmyyyy format); 

g. Value date (in mmddyyyy or ddmmyyyy format); 

h. Loan effective date; 

i. Customer number/identifier; 

J. Currency; 

k. Ticket ID; 

I. Timestamp; 

m. Counterparty A (buyer/bidder); 

n. Counterparty B (seller/offeror); 

o. Nominal/notional size of the transaction; 

p. Interest basis (360/365 day year); 

q. The fixed interest rate; and 

30 
r. Any special or additional terms (e.g., a repurchase 

agreement or some form of "non-vanilla agreement"). 

• Transaction Records: Respondents shall retain for a period of five 

(5) years trade transaction records and daily position and risk 

reports, including (without limitation) monthly and quarterly 

position and risk reports, related to the trading activities of 

Submitter(s) and traders who primarily deal in derivatives products 

that reference a Benchmark Interest Rate; the records and repotis 

shall be easily accessible and convertible into Microsoft Excel file 

format. 

" Requirement To Record Communications: Respondents shall 

record and retain to the greatest extent practicable all of the 

following communications: 

a. All communications concerning the determination and 

review of the Submission(s); and 

b. All communications oftraders who primarily deal in 

derivatives products that reference a Benchmark Interest 

Rate concerning trades, transactions, prices, or trading 

strategies pertaining to any derivative that references any 

Benchmark Interest Rate (or the supervision thereof). 

The above communications shall not be conducted in a manner to 

prevent Respondents from recording such communications; 

Audio communications of Submitters and Supervisors shall be 

retained for a period of one (1) year. Audio communications of 

traders who primarily deal in derivatives products that reference a 

Benchmark Interest Rate, and who are located in at least the 

London offices of Respondents, shall be retained for a period of six 

(6) months. Subject to a reasonable time to implement, 

Respondents' audio retention requirements pursuant to these 

Undertakings shall commence within a reasonable period after the 

entry ofthis Order and shall continue for a period of five (5) years 

thereafter; 

All communications except audio communications shall be 

retained for a period of five (5) years; and 

Nothing in these Undertakings shall limit, restrict or narrow any 

obligations pursuant to the Act or the Commission Regulations 

promulgated thereunder, including but not limited to Regulations 

31 
1.31 and 1.35, 17C.F.R. §§ 1.31 and 1.35(2013),ineffectnowor 

in the future. 

v1. MONITORING AND AUDITING: 

111 Monitoring: Respondents shall maintain or develop monitoring 

systems or electronic exception reporting systems that identify 

possible improper or unsubstantiated Submissions. Such reports 

will be reviewed on at least a weekly basis and if there is any 

significant deviation or issues, the underlying documentation for 

the Submission shall be reviewed to determine whether the 

Submission is adequately substantiated. If it is not substantiated, 

Respondents shall notify their chief compliance officer(s) and the 

Benchmark Publisher; 

" Periodic Audits: Starting six (6) months from the date of the entry 

of this Order, and continuing every six (6) months thereafter, 

unless an annual audit is scheduled at the same time, Respondents 

shall conduct internal audits of reasonable, random samples of 

their Submission(s), the factors and all other evidence 

documenting the basis for such Submission(s), and 

communications of the Submitter(s) in order to verify the integrity 

and reliability of the process for determining Submission(s); and 

11 Annual Audits By Third Party Auditors: Starting one (1) year 

from the date of the entry of this Order, and continuing annually 

for four ( 4) additional years thereafter, Respondents shall retain an 

independent, third-patiy auditor to conduct an audit of their 

Submission(s) and the process for determining Submission(s), 

which shall include, without limitation, the following: 

a. Reviewing communications of Submitter(s) and 

Supervisor(s); 

b. Interviewing the Submitter(s) and Supervisor(s), to the 

extent they are still employed by Respondents; 

c. Obtaining written verification from the Submitter(s) and 

Supervisor(s), to the extent they are still employed by 

Respondents, that the Submission(s) were consistent with 

this Order, the policies and procedures in place for making 

Respondents' Submission(s), and the definitions applicable 

to the Benchmark Interest Rate for which Respondents 

made Submission(s); and 

32 
d. A written audit report to be provided to Respondents and 

the Commission (with copies addressed to the 

Commission's Division of Enforcement (the "Division")). 

vii. POLICIES, PROCEDURES AND CONTROLS: Within sixty (60) days 

of the entry of this Order, Respondents shall develop policies, procedures 

and controls to comply with each of the specific Undertakings set forth 

above with the goal of ensuring the integrity and reliability of their 

Submission(s). In addition, Respondents shall develop policies, 

procedures and controls to ensure the following: 

11 The supervision of the Submission process; 

" That any violations of the Undetiakings or any questionable, 

unusual or unlawful activity concerning Respondent' Submissions 

are reported to and investigated by Respondent' compliance or 

legal personnel and reported, as necessary, to authorities and the 

Benchmark Publishers; 

11 The periodic but routine review of electronic communications and 

audio recordings of or relating to the Submission Process; 

• Not less than monthly, the periodic physical presence of 

compliance personnel on the trading floors of the Submitter(s) 

and/or traders who primarily deal in derivatives products that 

reference a Benchmark Interest Rate in connection with these 

Policies, Procedures and Controls; 

11 The handling of complaints concerning the accuracy or integrity of 

Respondent' Submission(s) including: 

a. Memorializing all such complaints; 

b. Review and follow-up by the chief compliance officer(s) or 

his designee of such complaints; and 

11 The reporting of material complaints to the Chief Executive 

Officer and Board of Directors, relevant self-regulatory 

organizations, the relevant Benchmark Publisher, the Commission, 

and/or other appropriate regulators. 

vn1. TRAINING: Respondents shall develop training programs for all 

employees who are involved in their Submission(s), including, without 

limitation, Submitters and Supervisors, and all traders who primarily deal 

in derivatives products that reference a Benchmark Interest Rate. 

Submitters and Supervisors shall be provided with preliminary training 

33 
regarding the policies, and procedures and controls developed pursuant to 

Section 2(vii) of these Undertakings. By no later than October 15, 2014, 

all Submitters, Supervisors, and traders who primarily deal in derivatives 

products that reference a Benchmark Interest Rate shall be fully trained in 

the application of these Undertakings to them, as set forth herein. 

Thereafter, such training will be provided promptly to employees newly 

assigned to any of the above listed responsibilities, and again to all 

Submitters, Supervisors and traders who primarily deal in derivatives 

products that reference a Benchmark Interest Rate as part of Respondents' 

regular training programs. The training shall be based upon the 

individual's position and responsibilities, and as appropriate, address the 

following topics: 

11 The Undertakings set forth herein; 

11 The process of making Submission(s); 

• The impropriety of attempting to influence the determination of 

Respondents' Submission(s); 

11 The requirement to conduct all business related to Respondents' 

Submission(s) on Respondents' recorded telephone and electronic 

communications systems, and not on personal telephones or other 

electronic devices, as set forth in Section 2(v) of these 

Undertakings; 

11 The requirement to conduct certain business related to derivatives 

products that reference a Benchmark Interest Rate on Respondents' 

recorded telephone and electronic communications systems, and 

not on personal devices or systems, as set forth in Section 2(v) of 

these Undertakings; 

11 The policies and procedures developed and instituted pursuant to 

these Undertakings; and 

11 The employment and other potential consequences if employees 

act unlawfully or improperly in connection with Respondents' 

Submission(s) or process for determining Submission(s). 

ix. REPORTS TO THE COMMISSION: 

II Compliance with Undertakings: Every four (4) months, starting 

120 days from the entry ofthis Order, Respondents shall make 

interim reports to the Commission, through the Division, 

explaining their progress towards compliance with the 

Undertakings set forth herein. Within 365 days ofthe entry of this 

34 
Order, Respondents shall submit a report to the Commission, 

through the Division, explaining how they have complied with the 

Undertakings set forth herein. The report shall attach copies of and 

describe the internal controls, policies and procedures that have 

been designed and implemented to satisfy the Undetiakings. The 

report shall contain a certification from representatives of 

Respondents' Executive Management, after consultation with 

Respondents' chief compliance officer(s), that Respondents have 

complied with the Undetiakings set forth above, and that they have 

established policies, procedures and controls to satisfy the 

Undertakings set forth in this Order; 

• Submitter(s), Supervisor(s), and Heads of Appropriate Trading 

Desks: Within fourteen (14) days ofthe entry ofthis Order, or as 

soon as practicable thereafter, but no later than September 15, 

2014, Respondents shall provide, meet with and explain these 

Undertakings to all Submitters, Supervisors and the head of each 

trading desk that primarily deals in derivatives that reference a 

Benchmark Interest Rate. Within that same time frame, 

Respondents shallprovide to the Commission, through the 

Division, written or electronic affirmations signed by each 

Submitter, Supervisor, and head of each trading desk that primarily 

deals in derivatives that reference a Benchmark Interest Rate, 

stating that he or she has received and read the Order and 

Undertakings herein, and that he or she understands these 

Undertakings to be effective immediately; and 

111 Disciplinary and Other Actions: Respondents shall promptly 

report to the Commission, through the Division, all improper 

conduct related to any Submission(s) or the attempted 

manipulation or manipulation of a Benchmark Interest Rate, as 

well as any disciplinary action, or other law enforcement or 

regulatory action related thereto, unless de minimis or otherwise 

prohibited by applicable laws or regulations. 

3. DEVELOPMENT OF RIGOROUS STANDARDS FOR BENCHMARK 

INTEREST RATES 

To the extent Respondents are or remain contributors to any Benchmark Interest 

Rate, Respondents agree to make their best efforts to participate in efforts by 

current and future Benchmark Publishers, other price reporting entities and/or 

regulators to ensure the reliability of Benchmark Interest Rates, and through their 

patiicipation to encourage the following: 

1. METHODOLOGY: Creating rigorous methodologies for the contributing 

panel members to formulate their Submissions. The aim of such 

35 
methodologies should be to result in a Benchmark Interest Rate that 

accurately reflects the rates at which transactions are occurring in the 

market being measured by that Benchmark Interest Rate; 

ii. VERIFICATION: Enforcing the use of those methodologies through an 

effective regime of documentation, monitoring, supervision and auditing, 

required by and performed by the Benchmark Publishers, and by the 

contributing panel members internally; 

111. INVESTIGATION: Facilitating the reporting of complaints and concerns 

regarding the accuracy or integrity of Submissions to Benchmark Interest 

Rates or the published Benchmark Interest Rate, and investigating those 

complaints and concerns thoroughly; 

IV. DISCIPLINE: Taking appropriate action if, following a thorough 

confidential investigation, the Benchmark Publisher determines that a 

complaint or concern regarding the accuracy or integrity of a Submission 

or the published Benchmark Interest Rate has been substantiated; 

v. TRANSPARENCY: Making regular reports to the public and the markets 

of facts relevant to the integrity and reliability of each Benchmark Interest 

Rate. Such reports should include, but not be limited to, the following: 

11 At the time each Benchmark Interest Rate is published, the 

Benchmark Publisher should display prominently whether each 

rate is based entirely on transactions in the market the rate is 

supposed to reflect, or whether it instead is based, in whole or in 

part, on other data or information; 

11 The Benchmark Publisher also should make periodic reports 

regarding the number and nature of complaints and concerns 

received regarding the accuracy or integrity of Submissions or the 

published Benchmark Interest Rate while maintaining the 

anonymity of all those who have reported or are the subject of 

complaints and concerns; 

11 The Benchmark Publisher should additionally make periodic 

reports regarding the results of all investigations into such 

complaints and concerns while maintaining the anonymity of all 

those involved in investigations that have not yet been completed; 

and 

vi. FORMULATION: Periodically examining whether each Benchmark 

Interest Rate accurately reflects the rate at which transactions are 

occurring in the market being measured (using the statistical method 

prescribed by that Benchmark Interest Rate), and evaluating whether the 

36 
definition and instructions should be revised, or the composition of the 

panel changed; 

Such examinations should include a rigorous mathematical comparison of 

transactions in the relevant market with the published Benchmark Interest 

Rate on the same day over a specified period, and a determination of 

whether any differences are statistically or commercially significant. 

Every four (4) months, starting 120 days from the entry ofthis Order, 

Respondents shall report to the Commission, through the Division, either orally or 

in writing, on their patiicipation in such efforts, to the extent that such repmiing is 

not otherwise prohibited by law or regulations, by the rules issued by Benchmark 

Publishers, or by nondisclosure agreements by and between Respondents and 

Benchmark Publishers. 

4. COOPERATION WITH THE COMMISSION 

1. Respondents shall cooperate fully and expeditiously with the Commission, 

including the Division, and any other governmental agency in this action, 

and in any investigation, civil litigation or administrative matter related to 

the subject matter of this action or any current or future Commission 

investigation related thereto. As part of such cooperation, Respondents 

agree to the following for a period of five (5) years from the date of the 

entry of this Order, or until all related investigations and litigation are 

concluded, including through the appellate review process, whichever 

period is longer: 

II 

II 

II 

II 

II 

Preserve all records relating to the subject matter of this 

proceeding, including, but not limited to, audio files, electronic 

mail, other documented communications, and trading records; 

Subject to applicable laws and regulations, comply fully, promptly, 

completely, and truthfully with all inquiries and requests for 

information or documents; 

Provide authentication of documents and other evidentiary 

material; 

Subject to applicable laws and regulations, provide copies of 

documents within Respondents' possession, custody or control; 

Subject to applicable laws and regulations, Respondents will make 

their best efforts to produce any current (as of the time of the 

request) officer, director, employee, or agent of Respondents, 

regardless of the individual's location, and at such location that 

minimizes Commission travel expenditures, to provide assistance 

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at any trial, proceeding, or Commission investigation related to the 

subject matter of this proceeding, including, but not limited to, 

requests for testimony, depositions, and/or interviews, and to 

encourage them to testify completely and truthfully in any such 

proceeding, trial, or investigation; and 

• Subject to applicable laws and regulations, Respondents wiii make 

their best efforts to assist in locating and contacting any prior (as of 

the time of the request) officer, director, employee, or agent of 

Respondents; 

ii. Respondents also agree that they will not undertake any act, other than as 

required by applicable law, that would limit their ability to cooperate fully 

with the Commission. Respondents will designate an agent located in the 

United States of America to receive all requests for information pursuant 

to these Undertakings, and shall provide notice regarding the identity of 

such Agent to the Division upon entry of this Order. Should Respondents 

seek to change the designated agent to receive such requests, notice of 

such intention shall be given to the Division fourteen (14) days before it 

occurs. Any person designated to receive such request shall be located in 

the United States of America; and 

111. Respondents and the Commission agree that nothing in these 

Undertakings shall be construed so as to compel Respondents to continue 

to contribute Submission(s) related to any Benchmark Interest Rate. 

Without prior consultation with the Commission, Respondents remain free 

to withdraw from the panel of contributors to any Benchmark Interest 

Rate. 

5. PROHIBITED OR CONFLICTING UNDERTAKINGS 

Should the Undertakings herein be prohibited by, or be contrary to the provisions 

of any obligations imposed on Respondents by any presently existing, or 

hereinafter enacted or promulgated laws, regulations, regulatory mandates, or the 

rules or definitions issued by a Benchmark Publisher, then Respondents shall 

promptly transmit notice to the Commission (through the Division) of such 

prohibition or conflict, and shall meet and confer in good faith with the 

Commission (through the Division) to reach an agreement regarding possible 

modifications to the Undertakings herein sufficient to resolve such inconsistent 

obligations. In the interim, Respondents will abide by the obligations imposed by 

the law, regulations, regulatory mandates and Benchmark Publishers' rules and 

definitions. Nothing in these Undertakings shall limit, restrict or narrow any 

obligations pursuant to the Act or the Commission Regulations promulgated 

thereunder, including but not limited to Regulations 1.31 and 1.35, 17 C.F .R. §§ 

1.31 and 1.35 (2013), in effect now or in the future. 

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6. PUBLIC STATEMENTS 

Respondents agree that neither they nor any of their successors and assigns, 

agents or employees under their authority or control shall take any action or make 

any public statement denying, directly or indirectly, any findings or conclusions 

in this Order or creating, or tending to create, the impression that this Order is 

without a factual basis; provided, however, that nothing in this provision shall 

affect Respondents' (i) testimonial obligations, or (ii) right to take legal positions 

in other proceedings to which the Commission is not a party. Respondents and 

their successors and assigns shall undertake all steps necessary to ensure that all 

of their agents and/or employees under their authority or control understand and 

comply with this agreement. 

D. Partial Satisfaction: Respondents understand and agree that any acceptance by the 

Commission of partial payment of Respondents' CMP Obligation shall not be deemed a 

waiver of their obligation to make further payments pursuant to this Order, or a waiver of 

the Commission's right to seek to compel payment of any remaining balance. 

The provisions of this Order shall be effective as of this date. 

By the Commission. 

Dated: July 28, 2014 

Christopher rkpatrick 

Acting Secretary ofthe Commission 

Commodity Futures Trading Commission 

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