Barclays fined over Libor rates

8 May 2013

Barclays has been fined £290m ($450m) after trying to manipulate a key lending rate between banks called the Libor rate.

The case has once again raised the issue of bringing criminal prosecutions against the individual bankers responsible.  But, as ever, the problem is being able to prove who those responsible were.  

The Financial Services Authority (FSA) as the industry 'watchdog' can impose fines, but prosecutions can only be brought by the Serious Fraud Office (SFO).  There have been numerous examples in the past of highly costly, long running prosecutions brought by the SFO collapsing without any success. This is largely thought to be caused by the complexity of the financial system in which they are trying to operate, and also concerns at a the ability of juries, comprising 12 'ordinary' members of the public, to comprehend the complex nature of the evidence.  How many of us have 'glazed over' when listening to our individual financial advisors trying to explain the comparatively straight forward nuances of a private pension plan?  Just imagine being a juror on a trial of this nature.

The SFO has, however, said that it is "considering whether it is both appropriate and possible to bring criminal prosecutions".  There are a number of issues that have to be considered before they could proceed, but any prosecution would be brought under the Fraud Act 2006, and if successful, the maximum penalties available would be 10 years imprisonment.  Charges of this kind are rare due to the inherent complexity of the subject matter, and require proof not only of an individual's actions, but also their intent or knowledge, which can be shown to prove their culpability, all of which, in turn, has to be to a level so that a jury is sure of that person's guilt.

Yesterday Barclays' chairman Marcus Agius resigned, and today, only a short while ago, the Chief Executive Bob Diamond, who has perhaps become 'the face' of this and other recent front page media stories involving Barclays, announced his resignation too.

Independent reviews and parliamentary inquiries are being announced to look into the issues raised by this latest scandal involving the financial sector.  One of the main concerns of bringing criminal prosecutions in such a case is the cost factor, and when you consider the cost of the the reviews and inquiries already set in motion, the potential total cost to the public purse could be eye-watering.

The above article is not legal advice; it is intended to provide information of general interest about current legal issues.