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The European Commission (EC) has begun discussions with the financial industry to determine a means of subjecting benchmark indices to restrictions that will make them less prone to manipulation, even as regulatory filings reveal that Barclays terminated a trader and an executive at the end of July for their roles in LIBOR fixing.
Reuters reported Wednesday that the EC issued a report, along with a public questionnaire, that expressed its concerns over manipulation of benchmark rates such as the London interbank offered rate (LIBOR) and also laid out its intent to impose restrictions on how the rates are compiled and put into effect.
"The international investigations underway into the manipulation of LIBOR have revealed yet another example of unacceptable behavior by banks," said a statement by Michel Barnier, the European commissioner in charge of regulation. He continued: "Wider work is required to regulate how indices and benchmarks are compiled, produced and used."
The LIBOR scandal is apparently not finished with Barclays yet, either, even after claiming three of its top executives. Regulatory filings from the bank showed that on July 29, FINRA was notified that the executive, a managing director and for six years head of U.S. interest rate trading in New York, Ritankar "Ronti" Pal, was "discharged" on July 30.
According to the filing, Pal’s departure was due to the fact that the bank had a "loss of confidence" in him as a manager for failing "to properly supervise individuals on his team," according to one of the filings. While Pal’s exit from the bank had been reported earlier, no reason had been provided.
Another filing revealed that on July 30, Dong (Don) Kun Lee, a New York-based derivatives trader who reported to Pal, was also terminated, for allegedly engaging "in communications involving inappropriate requests relating to LIBOR."
Such regulatory filings, with their disclosure of the reasons for staff departures, are not normally made public, according to the report, and were provided by a source.
In a statement that did not directly mention the actions taken toward either Pal or Lee, Barclays said that "the firm undertook a thorough and robust internal disciplinary process promptly following the regulatory review, which was completed in late July."