A senior yen trader at Royal Bank of Scotland made a revealing observation in mid-2007 about the bank panel that sets the borrowing rate in Japanese yen.
"The jpy libor is a cartel now. It's just amazing how libor fixing can make you that much money," the senior trader wrote in an instant message to traders at two other banks, according to a filing by the US Commodity Futures Trading Commission.
On Wednesday RBS admitted to manipulating the London Interbank Offered Rate in yen and Swiss francs between 2006 to 2010 and agreed to pay L390 million to the CFTC, US Department of Justice, and the UK's Financial Services Authority. Its Japan subsidiary pleaded guilty to wire fraud.
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The attempts at manipulation within RBS were so casual that one trader joked that he moved his fixes day to day as much as a prostitute draws up and down her underwear, while a broker at another firm offered a RBS rate submitter a steak dinner in exchange for a favourable fix, according to the CFTC order.
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Before the STM desk was physically separated in late 2008, there were relatively few written exchanges, but they included one conversation in which a trader asked for a low submission on Swiss francs. "What's it worth?" the submitter asked. "I've got some sushi rolls from yesterday," the trader responded.
After the separation, the electronic conversations became more frequent. However, the nature did not change. "Libors as requested," a submitter wrote in 2009. "You a top dog." The messages and emails laid an evidence trail that authorities would eventually follow.
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Traders' requests were frequent and often changed direction. In September 2009 a RBS submitter moved the submission high one day for a yen trader and then lower the next day. "... Make your mind up haha," the submitter said.
"I'm like a whore's drawers," the yen trader replied.
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