Money & Finance › Fraud, scams & enforcement › Securities fraud: lying to investors and rigging markets
LIBOR rate-rigging scandal
Exposed 2012· Fraud or scheme
Fact, law or dataA rule, statute, definition or measured number.
Bank traders and rate setters manipulated LIBOR, the benchmark behind hundreds of trillions of dollars of loans and derivatives, for years before 2012.
See it on the Money & Finance map →How it works
Each morning a panel of big banks told London what they thought they would pay to borrow from each other; the trimmed average became LIBOR. Because submissions were estimates, not trades, they could be nudged. Derivatives traders asked submitters to shade the rate a fraction to help their bets, and during 2007–08 banks lowballed to look healthier. Barclays admitted it in June 2012. UBS, RBS, Deutsche Bank and others followed; fines worldwide totaled about $9 billion.
Why it matters
It proved a benchmark built on opinions can be gamed, and pushed regulators to replace LIBOR with rates based on actual transactions, such as SOFR.
Think of it like
Like setting a market's cap rate by asking brokers what they think instead of using closed sales, while some of those brokers hold bets on the answer.
Facts, rules and data
Settlement documents quoting traders' emails and chats, starting with Barclays' June 2012 US and UK settlements, and Wall Street Journal analysis in 2008 showing rates out of line with market signals.
Debates and risks
Whether shading an estimate was a crime is contested: a US appeals court in 2022 and the UK Supreme Court in 2025 overturned key traders' convictions, including Tom Hayes's.
Connections (2)
▸LIBOR rate-rigging scandal led to the switch to SOFR: the benchmark rate that replaced LIBORFact, law or data
The connection
Once LIBOR was shown to rest on bankers' guesses, regulators wanted a rate built from real trades. After 2008, banks also lent each other so little unsecured money that few real trades existed to anchor LIBOR. A Fed-convened committee picked SOFR, based on trillions of dollars a day of overnight Treasury-backed loans.
When and why
The committee chose SOFR in 2017; the UK regulator said that year it would stop compelling LIBOR after 2021; US dollar LIBOR ended June 30, 2023.
How we know
Records of the Alternative Reference Rates Committee, UK regulator Andrew Bailey's July 2017 speech, and the 2022 federal LIBOR Act that moved old contracts to SOFR.
Debates and risks
SOFR has no bank-credit element, so some lenders argue it can fall in a crisis while their own funding costs rise; rival credit-sensitive rates mostly faded.
▸LIBOR rate-rigging scandal involved traders at Investment banks: underwriting, deals and tradingFact, law or data
The connection
The rate submitters and the traders worked at the same global banks. Derivatives traders, holding positions that gained or lost millions on tiny rate moves, asked colleagues who submitted their bank's rate to nudge it, and coordinated with traders and brokers at other banks.
When and why
Trading desks in London, Tokyo and New York, roughly 2005–2010, at Barclays, UBS, RBS, Deutsche Bank and others.
How we know
Regulators published traders' messages in settlement papers, and prosecutors in the US and UK charged individual traders.
Debates and risks
How far up each bank the knowledge went is disputed; few senior managers were charged.