RBS Says Former Singapore Trader Sought to Manipulate Libor
January 27, 2012, 12:53 AM ESTBy Andrea Tan
(Adds lawsuit in second paragraph.)
Jan. 19 (Bloomberg) -- Royal Bank of Scotland Group Plc said it did nothing wrong when it fired a former Singapore trader because he sought to manipulate London interbank offered rates to boost his own profits.
Tan Chi Min, the former trader, sued the bank over his dismissal and is seeking to recoup $1.5 million in bonuses and 3.3 million RBS shares that he claims he’s owed.
Tan deserved to be fired because he was guilty of “gross misconduct,” RBS, Britain’s biggest government-owned lender, said in court papers filed in Singapore High Court late yesterday. He tried to improperly influence RBS’s rate setters from 2007 to 2011 and persuade them to submit Libor rates at particular levels to his benefit, RBS said.
RBS is cooperating with investigations by the U.S. Commodity Futures Trading Commission, U.S. Department of Justice and European Commission into whether Libor had been manipulated. Since as early as 2007, investors have accused several banks on the Libor panel of distorting market prices by hiding true borrowing costs, leading to a series of lawsuits filed in 2011 that are making their way through courts in Europe and the U.S.
Tan said in his complaint dated Dec. 27 that he was in no position to influence the rate on his own. The former head of delta trading for RBS’s global banking and markets division in Singapore said the bank failed to detail the allegations against him and didn’t specify how he had improperly influenced the setting of Libor.
Suresh Nair, Tan’s lawyer, declined today to comment.
Rate Setting
The British Bankers’ Association sets the Libor rate after receiving input from 16 banks, including RBS. The data from the banks reflect how much it would cost them to borrow from each other for various periods of time, in currencies including dollars, euros and yen. Thomson Reuters Corp. compiles the rates daily for the association.
The benchmark determines interest rates on an estimated $360 trillion of financial instruments around the world, according to the Bank for International Settlements. The rate represents the average of the collected figures, minus several of the highest and lowest quotes.
The delta trading desks at investment banks handle trades for clients, typically helping them to speculate on, or hedge the performance of, a basket of securities.
The case is Tan Chi Min v The Royal Bank of Scotland Plc S939/2011 in the Singapore High Court.
--Editors: Joe Schneider, Lena Lee
To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net
To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net
