Citibank to pay $425M to settle CFTC charges

Allegations focused on manipulation of financial benchmarks

Citibank agreed to pay $425 million in fines to settle civil charges it attempted to manipulate financial benchmarks between 2007 and 2012, a federal regulator said Wednesday.

Citigroup “on multiple occasions” tried to boost trading profits by attempting to manipulate and make false reports about the U.S. Dollar International Swaps and Derivatives Association Fix, a benchmark for interest rate products, the U.S. Commodity Futures Trading Commission said.

Citibank and two Japanese affiliates also attempted to manipulate the London Interbank Offered Rate popularly known as Libor, as well as the Euroyen Tokyo Interbank Offered Rate benchmarks, the CFTC said. The benchmarks in multiple world currencies are used to set rates on trillions of dollars in mortgages, credit cards and loans.

Separately, Citibank was charged with false reporting of U.S. dollar Libor “to avoid generating negative media attention and to protect its reputation” during the financial crisis from the spring of 2008 through the summer of 2009, the CFTC said.

Although several European banks had previously agreed to pay fines for alleged Libor-related manipulation, Citibank is the first U.S.-based bank to reach a similar settlement.

Citibank will pay $250 million to settle the ISDAfix charges, while the bank and its Japanese affiliates will pay $175 million to resolve the Libor-related allegations, the CFTC said.

Citibank, which neither admitted nor denied the allegations, characterized the settlements as a significant step in resolving older investigations.