The European Commission has proposed making interest rate fixing a criminal offence - a move it hopes would help” put an end to criminal activity in the banking sector”.
Manipulating benchmark rates, such as Libor and Euribor, will be added to insider dealing as criminal offences, the Commission said in a statement. It wants EU members to pass new laws.Justice Commissioner Viviane Reding presented the amendments on Wednesday to impose criminal penalties on manipulation. She said the proposals will help restore public and investor confidence and close any regulatory loopholes. "Public confidence has taken a nosedive with the latest scandals about serious manipulations of lending rates by banks," Reding said."A swift agreement on these proposals will help restore much needed confidence of the public and investors in this crucial sector of the economy," she saidBarclays Bank was fined $453mln after admitting that it attempted to manipulate the Libor and Euribor rates between 2005 and 2009.The scandal led to the resignations of chief executive Bob Diamond, chairman Marcus Agius, and chief operating officer, Jerry del Missier.Fifteen financial institutions are still under investigation in the US, UK and Asia in connection with the rate-fixing scandal.