Rabobank: The Submitters Had Positions of Their Own

Rabobank’s LIBOR and Euribor CFTC order required a $475 million civil penalty to settle benchmark manipulation and false-reporting charges. The Commodity Futures Trading Commission alleged that the people choosing the bank’s rate submissions also held trading positions that could benefit from those rates. For someone inside a rates desk, the telling records connect the rate a trader wanted, the position it served and the submission that followed.

Rabobank, the Dutch bank headquartered in Utrecht, agreed to the order on October 29, 2013. The Commission alleged hundreds of manipulative acts from at least mid-2005 through early 2011, including successful manipulation of Yen LIBOR on some occasions. Its announcement also described separate actions by the Justice Department and authorities in the United Kingdom, Japan and the Netherlands.

How the Submissions Reached Other People’s Contracts

LIBOR and Euribor submissions were meant to reflect borrowing costs. At the time, LIBOR asked what a panel bank could pay to borrow unsecured funds, while Euribor asked about euro deposits offered between prime banks. Rabobank contributed U.S. Dollar, Yen and Sterling LIBOR rates and Euribor rates. It also traded contracts whose value depended on those benchmarks.

For LIBOR, banks submitted rates shortly before 11 a.m. London time. The calculation discarded the highest and lowest quarters of the submissions and averaged the rest for each tenor, the period the interest rate covered. Euribor also used a panel and a trimmed average. A request for a high six-month rate and a low one-month rate could therefore target different exposures on the same trading book.

The reach went well beyond the submitting desks. The order described approximately $350 trillion in notional swaps and $10 trillion in loans indexed to LIBOR, alongside exchange-traded interest-rate futures and options. A rate adjusted to help one desk became an input used by people who had no part in choosing it.

A working paper from a World Federation of Exchanges research project, An Analysis of Market Manipulation Definitions Around the World, dated 2024, describes benchmark rigging as manipulation through false or misleading submissions. It also explains why submitters may coordinate when one submission has little influence. That is the connection to wider commodity market manipulation: the input is changed where the benchmark is calculated, and the financial benefit sits in contracts priced from it.

The Conflict Was Built Into the Desk

The Commodity Futures Trading Commission alleged that Rabobank assigned its submissions to traders who handled both the bank’s funding and derivatives positions. Those derivatives trades served both hedging and profit-making purposes. Submitters sat alongside other derivatives traders, and a senior manager encouraged them to discuss positions through Bloomberg chats, email and conversations across the desk.

The order identifies the market information submitters considered: funding costs, money-market transactions, broker indications, liquidity and the bank’s credit standing. It also alleges that submitters routinely factored in their own positions and those of colleagues. We see the conflict in that combination: the same person could assess the funding market and then adjust the answer for the trading book.

In the order’s account, moving the work did not remove that conflict. In January 2009, Rabobank transferred its LIBOR submission process, except Sterling, from London to Utrecht as part of centralizing operations. The order’s findings reached traders and managers in London, New York, Utrecht, Tokyo, Singapore and Hong Kong, with more than two dozen traders involved.

The Commission alleged that Rabobank had no policies, internal controls or procedures for determining, monitoring or supervising these submissions at the time. It also alleged inadequate supervision and a failure to provide training or standards for benchmark submissions. We see the absurdity in that account: rates used to price contracts around the world, with no rules for the desk supplying them.

Deutsche Bank also faced a separate CFTC order over false LIBOR and Euribor submissions and manipulation. The Rabobank order makes the day-to-day conflict particularly clear: responsibility for the submission sat with people whose positions it could reward.

The Requests Across Dollar, Yen, Sterling and Euribor

The order describes different routes by which trading preferences reached submissions. Some traders shouted across a desk, others sent messages across offices, and former colleagues sought help from outside the bank. The Commission also charged Rabobank with helping traders at other banks attempt to manipulate Yen LIBOR and Euribor.

U.S. Dollar LIBOR and the Desk’s Pecking Order

For U.S. Dollar LIBOR, the order alleged repeated requests from London and New York traders, with submitters considering both those requests and their own positions. A senior London trader’s wishes took precedence when requests conflicted. In an October 17, 2007 email reproduced in the order, that trader made the desired direction unmistakable:

The order reproduces a later exchange in which the senior trader complained that a submission had been above the average when he wanted a low settlement. The submitter defended the rate using quotes from brokers, but still apologized. We find that telling: an apology for a rate he said he still thought was fair.

Yen LIBOR and Rates Copied From Traders

For Yen LIBOR, the order alleged hundreds of internal requests and occasions when the attempts succeeded in changing the official fixing. A senior submitter sometimes sought out traders’ preferences and moved submissions higher or lower for their positions and his own. Requests came from desks in Tokyo, Singapore and Hong Kong as well as from within London.

According to the order, one backup submitter followed a senior manager’s instruction to obtain the rates from traders in the bank’s Asian offices. He copied those rates into Rabobank’s submissions without independently assessing borrowing costs. When no preferred rates arrived, the instruction was to use the previous day’s fixings. In that account, the bank’s judgment about funding had become a relay for traders’ preferences.

Sterling LIBOR and the Backup Submitters

The Sterling findings covered at least late 2007 through early 2009. The order alleged that the primary submitter, backup submitters and desk manager sometimes considered their Sterling positions when determining submissions. The primary submitter also sent requests when someone else was covering the role, and the backups and manager accommodated them.

That makes the handover part of the story. The person entering the rate could change while the position influencing it stayed with the colleague asking for a particular fixing.

Euribor and Requests From Outside the Panel

Rabobank’s Euribor submitter accommodated requests from former colleagues working at a bank outside the Euribor panel, according to the CFTC order. Those traders explained which positions would gain or suffer, and the submitter sometimes adjusted Rabobank’s contribution to suit them. In the Commission’s account, a bank without its own panel submission could reach the calculation through an old colleague.

The order also describes regular requests from Rabobank’s own Euro derivatives desk. It says those requests came two or three times a week from approximately mid-2007 through late 2008, particularly when the desk had large positions it could not hedge. The submitter developed a practice of asking the desk what it wanted before submitting the day’s rates.

The Warning Closed One Route and the Trader Found Another

The Commodity Futures Trading Commission alleged that the conduct continued after its investigation began. Rabobank received the Commission’s request to investigate its U.S. Dollar LIBOR practices internally in April 2010. On November 30, a senior manager told the Yen submitters to stop considering traders’ rate requests, and they refused the senior Yen trader’s requests that day.

According to the order, the next day the trader contacted a London broker at ICAP Europe Limited for help influencing Yen LIBOR. The order says he continued asking for that assistance into early 2011. It explains why the broker mattered: submitters relied on brokers’ market views, and brokers spoke with clients at numerous institutions.

This is the part a compliance or surveillance employee may recognize. The order describes an internal refusal followed by an attempt to influence someone whose information submitters used. It traces that continued effort through messages outside the bank.

What the CFTC Required Rabobank to Change

The order required changes to who made submissions, where they sat and what the bank recorded. Submitters and supervisors could not be assigned to derivatives trading desks, and their derivatives trading and pay were restricted. Submitters also had to sit far enough from the relevant derivatives traders that the groups could not hear one another.

The documentation requirements connected the rate to its inputs. Rabobank had to record the factors used for each submission, transactions excluded or given greatest weight, models and adjustments, and broker bids and offers relied upon. The order also required retention of trading records, position and risk reports, and communications about submissions and benchmark-linked trading.

For a reporting or recordkeeping concern, that connection matters: the rate, the supporting market information and the desk’s exposure need to be read together. The order required review of exception reports and both internal and independent audits. Complaints about submission accuracy or integrity had to be recorded and followed up, giving the bank a record of both the concern and its response.

What Evidence Is Required to Prove Fraud?

In Rabobank’s case, the order connected the requested rate to the trading interest and the submission actually made. Rabobank’s order shows that connection through trader messages, submission practices and positions, then requires records of the funding information supporting each rate. The comparison is between what the market information supported and what the desk wanted.

An insider can explain why a particular tenor mattered, who could change the submission, and whether a broker’s indication reflected a market view or a request passed through another channel. A supervisor or compliance employee may know what happened when someone questioned the process. Those explanations give the records meaning, and they are the substance we work through with you. Under the CFTC whistleblower reward program, whistleblowers can collectively receive 10% to 30% of the monetary sanctions collected in an action.

You Know What the Submission Was Serving

Your knowledge of who requested a rate, who changed the submission and whose position benefited can give a benchmark case its direction. We build your strongest account with you, bring in CFTC benchmark-manipulation whistleblower lawyers and stay beside you through the case. Speak with our whistleblower experts about the submission and the position behind it.