The Libor scandal was a series of criminal allegations by financial authorities connected to the Libor (London Inter-bank Offered Rate) and the related Euribor benchmark, together with the resulting investigations and prosecutions. All ten convictions in the United States were overturned or vacated by 2022, after appellate courts held there was no evidence traders had broken any laws or rules. Eight of the nine convictions in England were quashed by 2026, leaving only the original "whistleblower" convicted out of the entire set of prosecutions. The Wall Street Journal in 2026 described the government allegations as a “persecution” and said politicians and prosecutors had sought scapegoats to distract from their own failures during the 2008 Great Recession. Senior British politicians John McDonnell and David Davis said it had been a miscarriage of justice and a hunt for scapegoats.
Libor is an average interest rate calculated through submissions of interest rates by major banks across the world. The scandal arose when it was discovered in 2012 that banks were inflating or deflating their rates so as to profit from trades, or to give the impression that they were more creditworthy than they were. Libor underpins approximately $350 trillion in derivatives. It was later administered by Intercontinental Exchange (ICE), which took over running the Libor in January 2014, though Libor was later phased out as a market benchmark. Some bank traders in the United States and Britain were convicted of fraud or conspiracy to defraud.
The banks were supposed to submit the actual interest rates they are paying, or would expect to pay, for unsecured borrowing from other banks; in fact little inter-bank borrowing took place on this basis and instead estimates had to be submitted. Libor was supposed to be the total assessment of the health of the financial system because if the banks being polled feel confident about the state of things, they report a low number and if the member banks feel a low degree of confidence in the financial system, they report a higher interest rate number. In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the scandal.
Because Libor was used in US derivatives markets, an attempt to manipulate Libor could have been an attempt to manipulate US derivatives markets, and thus a violation of American law. Since mortgages, student loans, financial derivatives, and other financial products often rely on Libor as a reference rate, the manipulation of submissions used to calculate those rates could have significant effects on consumers and financial markets worldwide.
On 27 July 2012, the Financial Times published an article by a former trader which stated that Libor manipulation had been common since at least 1991. Further reports on this have since come from the BBC and Reuters. On 28 November 2012, the Finance Committee of the Bundestag held a hearing to learn more about the issue.
The British Bankers' Association (BBA) said on 25 September 2012 that it would transfer oversight of Libor to UK regulators, as proposed by Financial Services Authority managing director Martin Wheatley's independent review recommendations. Wheatley's review recommended that banks submitting rates to Libor must base them on actual inter-bank deposit market transactions and keep records of those transactions, that individual banks' LIBOR submissions be published after three months, and recommended criminal sanctions specifically for manipulation of benchmark interest rates. Financial institution customers may experience higher and more volatile borrowing and hedging costs after implementation of the recommended reforms. The UK government agreed to accept all of the Wheatley Review's recommendations and press for legislation implementing them.
Significant reforms, in line with the Wheatley Review, came into effect in 2013 and a new administrator took over in early 2014. The UK controls Libor through laws made in the UK Parliament. In particular, the Financial Services Act 2012 brings Libor under UK regulatory oversight and creates a criminal offence for knowingly or deliberately making false or misleading statements relating to benchmark-setting.
As of November 2017, 13 traders had been charged by the UK Serious Fraud Office as part of their investigations into the Libor scandal. Of those, eight were acquitted in early 2016. Four were found guilty (Tom Hayes, Alex Pabon, Jay Vijay Merchant and Jonathan James Mathew), and one pleaded guilty (Peter Charles Johnson). The UK Serious Fraud Office closed its investigation into the rigging of Libor in October 2019 following a detailed review of the available evidence. It is estimated that the seven-year investigation of the Libor scandal in the UK cost at least £60 million.
BBC Radio 4 produced a programme, The Lowball Tapes, that questions whether the right people were convicted for rigging rates. The programme also alleges that at the height of the 2008 financial crisis, the Bank of England was giving instructions to banks to rig Libor to a much greater extent than the traders ever did on their own account. This was subsequently published as a book.
Following a series of related convictions of others in the United States for conspiracy for wire fraud and bank fraud, the US Court of Appeals for the Second Circuit in 2022 overturned the convictions of Matthew Connolly and Gavin Campbell Black on the grounds that the cases had not demonstrated that the Libor submissions were made with 'fraudulent intent'. This led to other similar convictions in the United States being overturned.
In the United Kingdom, the Supreme Court on 23 July 2025 allowed the appeals of Tom Hayes (originally convicted of conspiracy to defraud in 2015) and Carlo Palombo (2019), saying their convictions were unsafe because "It was wrong for the judge [Judge Anthony Leonard] to direct the jury that, if the submitter took any account of the commercial interests of the bank or a trader, the rate submitted was for that reason not a genuine or honest answer to the question posed by the [LIBOR or EURIBOR] definitions as a matter of law".
The Libor scandal was a series of criminal allegations by financial authorities connected to the Libor (London Inter-bank Offered Rate) and the related Euribor benchmark, together with the resulting investigations and prosecutions. All ten convictions in the United States were overturned or vacated by 2022, after appellate courts held there was no evidence traders had broken any laws or rules. Eight of the nine convictions in England were quashed by 2026, leaving only the original "whistleblower" convicted out of the entire set of prosecutions. The Wall Street Journal in 2026 described the government allegations as a “persecution” and said politicians and prosecutors had sought scapegoats to distract from their own failures during the 2008 Great Recession. Senior British politicians John McDonnell and David Davis said it had been a miscarriage of justice and a hunt for scapegoats.
Libor is an average interest rate calculated through submissions of interest rates by major banks across the world. The scandal arose when it was discovered in 2012 that banks were inflating or deflating their rates so as to profit from trades, or to give the impression that they were more creditworthy than they were. Libor underpins approximately $350 trillion in derivatives. It was later administered by Intercontinental Exchange (ICE), which took over running the Libor in January 2014, though Libor was later phased out as a market benchmark. Some bank traders in the United States and Britain were convicted of fraud or conspiracy to defraud.
The banks were supposed to submit the actual interest rates they are paying, or would expect to pay, for unsecured borrowing from other banks; in fact little inter-bank borrowing took place on this basis and instead estimates had to be submitted. Libor was supposed to be the total assessment of the health of the financial system because if the banks being polled feel confident about the state of things, they report a low number and if the member banks feel a low degree of confidence in the financial system, they report a higher interest rate number. In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions, leading to the scandal.
Because Libor was used in US derivatives markets, an attempt to manipulate Libor could have been an attempt to manipulate US derivatives markets, and thus a violation of American law. Since mortgages, student loans, financial derivatives, and other financial products often rely on Libor as a reference rate, the manipulation of submissions used to calculate those rates could have significant effects on consumers and financial markets worldwide.
On 27 July 2012, the Financial Times published an article by a former trader which stated that Libor manipulation had been common since at least 1991. Further reports on this have since come from the BBC and Reuters. On 28 November 2012, the Finance Committee of the Bundestag held a hearing to learn more about the issue.
The British Bankers' Association (BBA) said on 25 September 2012 that it would transfer oversight of Libor to UK regulators, as proposed by Financial Services Authority managing director Martin Wheatley's independent review recommendations. Wheatley's review recommended that banks submitting rates to Libor must base them on actual inter-bank deposit market transactions and keep records of those transactions, that individual banks' LIBOR submissions be published after three months, and recommended criminal sanctions specifically for manipulation of benchmark interest rates. Financial institution customers may experience higher and more volatile borrowing and hedging costs after implementation of the recommended reforms. The UK government agreed to accept all of the Wheatley Review's recommendations and press for legislation implementing them.
Significant reforms, in line with the Wheatley Review, came into effect in 2013 and a new administrator took over in early 2014. The UK controls Libor through laws made in the UK Parliament. In particular, the Financial Services Act 2012 brings Libor under UK regulatory oversight and creates a criminal offence for knowingly or deliberately making false or misleading statements relating to benchmark-setting.
As of November 2017, 13 traders had been charged by the UK Serious Fraud Office as part of their investigations into the Libor scandal. Of those, eight were acquitted in early 2016. Four were found guilty (Tom Hayes, Alex Pabon, Jay Vijay Merchant and Jonathan James Mathew), and one pleaded guilty (Peter Charles Johnson). The UK Serious Fraud Office closed its investigation into the rigging of Libor in October 2019 following a detailed review of the available evidence. It is estimated that the seven-year investigation of the Libor scandal in the UK cost at least £60 million.
BBC Radio 4 produced a programme, The Lowball Tapes, that questions whether the right people were convicted for rigging rates. The programme also alleges that at the height of the 2008 financial crisis, the Bank of England was giving instructions to banks to rig Libor to a much greater extent than the traders ever did on their own account. This was subsequently published as a book.
Following a series of related convictions of others in the United States for conspiracy for wire fraud and bank fraud, the US Court of Appeals for the Second Circuit in 2022 overturned the convictions of Matthew Connolly and Gavin Campbell Black on the grounds that the cases had not demonstrated that the Libor submissions were made with 'fraudulent intent'. This led to other similar convictions in the United States being overturned.
In the United Kingdom, the Supreme Court on 23 July 2025 allowed the appeals of Tom Hayes (originally convicted of conspiracy to defraud in 2015) and Carlo Palombo (2019), saying their convictions were unsafe because "It was wrong for the judge [Judge Anthony Leonard] to direct the jury that, if the submitter took any account of the commercial interests of the bank or a trader, the rate submitted was for that reason not a genuine or honest answer to the question posed by the [LIBOR or EURIBOR] definitions as a matter of law".
Early reports
WSJ study
Libor manipulation to lower rate
Hi Guys, We got a big position in 3m libor for the next 3 days. Can we please keep the libor fixing at 5.39 for the next few days. It would really help. We do not want it to fix any higher than that. Tks a lot.
— Barclays Bank trader in New York to submitter, 13 September 2006
On 16 April 2008, The Wall Street Journal released an article, and later study, suggesting that some banks might have understated borrowing costs they reported for the Libor during the 2008 credit crunch that may have misled others about the financial position of these banks. In response, the BBA claimed that the Libor continued to be reliable even in times of financial crisis. Other authorities contradicted The Wall Street Journal article saying there was no evidence of manipulation. In its March 2008 Quarterly Review, the Bank for International Settlements stated that "available data do not support the hypothesis that contributor banks manipulated their quotes to profit from positions based on fixings." Further, in October 2008, the International Monetary Fund published its regular Global Financial Stability Review which also found that "Although the integrity of the U.S. dollar Libor-fixing process has been questioned by some market participants and the financial press, it appears that U.S. dollar Libor remains an accurate measure of a typical creditworthy bank's marginal cost of unsecured U.S. dollar term funding."
A study by economists Connan Snider and Thomas Youle, in April 2010 corroborated the results of the earlier Wall Street Journal study, concluding that the Libor submissions by some member banks were being understated. Unlike the earlier study, Snider and Youle suggested that the reason for understatement by member banks was not that the banks were trying to appear strong, especially during the 2008 financial crisis, but rather that the banks sought to make substantial profits on their large Libor interest-linked portfolios. For example, in the first quarter of 2009, Citigroup had interest rate swaps of notional value of $14.2 trillion, Bank of America had interest rate swaps of notional value of $49.7 trillion and JPMorgan Chase had interest rate swaps of notional value of $49.3 trillion. Given the large notional values, a small unhedged exposure to the Libor could generate large incentives to alter the overall Libor. In the first quarter of 2009, Citigroup for example reported that it would make that quarter $936 million in net interest revenue if interest rates would fall by .25 percentage points a quarter, and $1,935 million if they were to fall by 1 percentage point instantaneously.
Awareness of central banks
In November 2008, the Governor of the Bank of England, Mervyn King, told the UK Parliament that since the start of the 2008 financial crisis, "hardly anybody is willing to lend to any bank around the world for three months unsecured; they want to lend secured." As a result, he said that Libor had become "in many ways the rate at which banks do not lend to each other...it is not a rate at which anyone is actually borrowing."
The New York Federal Reserve chose to take no action against them at that time. Minutes by the Bank of England similarly indicated that the bank and its deputy governor Paul Tucker were also aware as early as November 2007 of industry concerns that the Libor rate was being under-reported. In one 2008 document, a Barclays employee told a New York Fed analyst, "We know that we're not posting an honest Libor, and yet we are doing it, because if we didn't do it, it draws unwanted attention on ourselves."
The documents show that in early 2008, a memo written by then New York Fed President Tim Geithner to Bank of England chief Mervyn King looked into ways to "fix" Libor. While the released memos suggest that the New York Fed helped to identify problems related to Libor and press the relevant authorities in the UK to reform, there is no documentation that shows any evidence that Geithner's recommendations were acted upon or that the Fed tried to make sure that they were. In October 2008, several months after Geithner's memo to King, a Barclays employee told a New York Fed representative that Libor rates were still "absolute rubbish."
Regulatory investigations
The Wall Street Journal reported in March 2011 that regulators were focusing on Bank of America Corp., Citigroup Inc. and UBS AG in their probe of Libor rate manipulation. A year later, it was reported in February 2012 that the US Department of Justice was conducting a criminal investigation into Libor abuse. Among the abuses being investigated were the possibility that traders were in direct communication with bankers before the rates were set, thus allowing them an unprecedented amount of insider knowledge into global instruments. In court documents, a trader from the Royal Bank of Scotland claimed that it was common practice among senior employees at his bank to make requests to the bank's rate setters as to the appropriate Libor rate, and that the bank also made on occasions rate requests for some hedge funds. One trader's messages from Barclays Bank indicated that for each basis point (0.01%) that Libor was moved, those involved could net, "about a couple of million dollars."
The Canadian Competition Bureau was reported on 15 July 2012 to also be carrying out an investigation into price fixing by five banks of the yen denominated Libor rates. Court documents filed indicated that the Competition Bureau had been pursuing the matter since at least January 2011. The documents offered a detailed view of how and when the international banks allegedly colluded to fix the Libor rates. The information was based on a whistleblower who traded immunity from prosecution in exchange for turning on his fellow conspirators. In the court documents, a federal prosecutor for the bureau stated, "IRD (interest-rate derivatives) traders at the participant banks communicated with each other their desire to see a higher or lower yen LIBOR to aid their trading positions." The alleged participants were the Canadian branches of the Royal Bank of Scotland, HSBC, Deutsche Bank, JP Morgan Bank, and Citibank, as well as ICAP (Intercapital), an interdealer broker.
Breadth of scandal becomes apparent
By 4 July 2012, the breadth of the scandal was evident and became the topic of analysis on news and financial programs that attempted to explain the importance of the scandal. Two days later, it was announced that the UK Serious Fraud Office had also opened a criminal investigation into manipulation of interest rates. The investigation was not limited to Barclays. It has been reported since then that regulators in at least ten countries on three different continents are investigating the rigging of the Libor and other interest rates. Around 20 major banks have been named in investigations and court cases.
Early estimates are that the rate manipulation scandal cost US states, counties, and local governments at least $6 billion in fraudulent interest payments, above $4 billion that state and local governments have already had to spend to unwind their positions exposed to rate manipulation. An increasingly smaller set of banks are participating in setting the Libor, calling into question its future as a benchmark standard, but without any viable alternative to replace it.
On 4 October 2012, Republican US SenatorsChuck Grassley (Iowa) and Mark Kirk (Illinois) announced that they were investigating Treasury SecretaryTim Geithner for complicity with the rate manipulation scandal. They accused Geithner of knowledge of the rate-fixing, and inaction which contributed to litigation that "threatens to clog our courts with multi-billion dollar class action lawsuits" alleging that the manipulated rates harmed state, municipal and local governments. The senators said that an American-based interest rate index is a better alternative which they would take steps towards creating.
Timothy Lee, a capital markets expert at the Federal Housing Finance Agency Office of Inspector General, said in a 3 November memo that Fannie Mae and Freddie Mac may have lost more than $3 billion because of the manipulation.
Parliamentary investigation
Appearing before Parliament on 16 July, Jerry del Missier, a former senior Barclays executive, said that he had received instructions from Robert Diamond to lower rates after Diamond's discussions with bank regulators. He said that he had received information of a conversation between Diamond and Paul Tucker, deputy governor of the Bank of England, in which they had discussed the bank's financial position at the height of the 2008 financial crisis. It was his understanding that senior British government officials had instructed the bank to alter the rates. Del Missier's testimony followed statements from Diamond in which he denied that he had told his deputies to report false Libor rates. Speaking before Parliament the previous week, Tucker stated that he had shared concerns regarding Barclays Libor rates because the markets might view Barclays to be at risk if its Libor submissions continued to be higher than those of other international banks. In the midst of the Lehman Brothers collapse, there was concern the bank might need to be bailed out if the financial markets perceived it was a credit risk. Tucker told the committee, "I wanted to make sure that Barclays' day-to-day funding issues didn't push it over the cliff."
Civil lawsuits
Cartel operation
Libor fixing a banking cartel
It's just amazing how Libor fixing can make you that much money or lose if opposite. It's a cartel now in London.
— RBS trader in Singapore to Deutsche Bank trader, 19 August 2007
In court documents filed in Singapore, Royal Bank of Scotland (RBS) trader Tan Chi Min told colleagues that his bank could move global interest rates and that the Libor fixing process in London had become a cartel. Tan in his court affidavit stated that the Royal Bank of Scotland knew of the Libor rates manipulation and that it supported such actions. In instant messages, traders at RBS extensively discussed manipulating Libor rates. In a released transcript of a 21 August 2007 chat, Jezri Mohideen, who was the head of yen products in Singapore, asked to have the Libor fixed in a conversation with other traders:
In another conversation on 27 March 2008, Tan asked that RBS raise its Libor submission and noted that an earlier lower figure that the bank had submitted had cost his team £200,000. In other released instant chats, Tan made it clear that the Libor fixing process had become a highly lucrative money making cartel. Tan in a conversation with traders at other banks, including Deutsche Bank's Mark Wong said on 19 August 2007:
Mortgage rate manipulation
Homeowners in the US filed a class action lawsuit in October 2012 against twelve of the largest banks which alleged that Libor manipulation made mortgage repayments more expensive than they should have been.