North Carolina Attorney General Josh Stein, along with 42 other state attorneys general, announced a $100 million settlement with Citibank over fraudulent conduct concerning interest rates.
“Manipulating interest rates is essentially sophisticated cheating,” Stein said in a press release accompanying the announcement of the settlement. “Citibank made millions as it used these rates to defraud government entities and not-for-profit organizations in North Carolina, harming people in the process. My office will continue [to] hold wrongdoers accountable.”
The 43 attorneys general accused Citibank of misrepresenting its dealings with the U.S. Dollar LIBOR rate, which benchmarks interest rates for short-term loans between some of the world’s largest banks and is one of the primary references for government and corporate bonds, mortgages, student loans and credit cards. LIBOR, or London Interbank Offered Rate, is based in five currencies, including the dollar.
Stein’s office said LIBOR is the “benchmark interest rate that affects financial instruments worth trillions of dollars and has a widespread impact on global markets and consumers.”
Citibank is alleged to have made submissions to LIBOR to avoid negative publicity and protect the reputation of the bank and had bank LIBOR submitters ask other Citibank employees to avoid offering higher rates on occasion. Those affected include state and local governments as well as nonprofits and other private entities.
Stein’s office said that government and nonprofit entities that have LIBOR-linked swaps and other investments with Citibank will be eligible for money from a $95 settlement fund. The rest will be used to pay costs and expenses of the investigation.