Global bank Societe Generale S.A. and a subsidiary have agreed to pay a combined $860 million penalty to resolve criminal charges pertaining to a scheme to bribe Libyan officials and violations arising from manipulation of the London InterBank Offered Rate (LIBOR). As part of a coordinated resolution with French authorities in the foreign bribery case, the U.S. government will credit $292,776,444 that Societe Generale will pay in France. The bank also agreed to pay $475 million in penalties and disgorgement to the CFTC for manipulation and false reporting in connection with the LIBOR scheme (In the Matter of Societe Generale S.A., June 4, 2018).
"For years, Societe Generale undermined the integrity of global markets and foreign institutions by issuing false financial data and by fraudulently securing contracts through bribery," said Acting Assistant Attorney General John Cronan.
Foreign Corrupt Practices Act. Between 2004 and 2009, Societe Generale admits that it paid a Libyan "broker" commissions based on the amount of investments made by Libyan state financial institutions. The broker would then pay portions of the commissions to high-level Libyan officials to secure investments by the institutions for Societe Generale. The investments totaling approximately $3.66 billion earned around $523 million in profits.
Societe Generale agreed to a deferred prosecution agreement in connection with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of transmitting false commodities reports. The subsidiary agreed to plead guilty to one count of conspiracy to violate the FCPA. Pursuant to its agreement with the Department of Justice, Societe Generale agreed to pay a $585 million criminal penalty.
LIBOR. From May 2010 to at least October 2011, Societe Generale acknowledges that it made falsely deflated U.S. Dollar LIBOR submissions, a downward manipulation designed to create the appearance that Societe Generale was financially stronger and more creditworthy than it was. This misconduct often altered the daily rate of USD LIBOR, affecting financial products around the world, according to the DOJ. Further, in 2006, Societe Generale employees manipulated Societe Generale’s Japan Yen (JPY) LIBOR submissions to benefit trading positions and improve profitability. The company agreed to pay $275 million for violations arising from its manipulative activity.
The CFTC found that Societe Generale’s lack of internal controls, procedures, and policies governing LIBOR submission processes and its failure to adequately supervise its trading desks allowed this misconduct to occur over a span of several years.
"Today’s action shows the CFTC’s continued commitment to ensuring the integrity of global benchmarks that impact the U.S. markets," said CFTC Enforcement Director James McDonald.
The case is CFTC Docket No. 18-14.
MainStory: TopStory CommodityFutures Derivatives Enforcement ExchangesMarketRegulation FraudManipulation InternationalNews Swaps
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