LIBOR and enforcement action
Produced in partnership with BROWNRUDNICK
LIBOR and enforcement action

The following Corporate Crime guidance note Produced in partnership with BROWNRUDNICK provides comprehensive and up to date legal information covering:

  • LIBOR and enforcement action
  • What is LIBOR?
  • The Wheatley review of LIBOR and LIBOR reforms
  • Adequacy and scope of sanctions
  • Implications for other benchmarks
  • Enforcement cases arising out of LIBOR
  • Criminal action
  • International coordination in enforcement
  • EU enforcement
  • EU Benchmarks Regulation
  • more

What is LIBOR?

LIBOR stands for the London Inter-Bank Offered Rate. It is the world’s most widely used benchmark for short-term interest rates. LIBOR was historically calculated as the average rate that a group of leading banks estimated they could borrow from each other over different terms and in different currencies.

The LIBOR rate was overseen by the British Bankers Association (BBA) which outsourced the administration of the LIBOR process to Thomson Reuters.

The LIBOR process required each participating bank to submit a response to the following question for each currency and each time period:

'at what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size just prior to 11am?'

On each business day, Thomson Reuters would receive rate submissions from a number of banks from which they calculated that day’s LIBOR rates. Rates were calculated across ten different currencies and for 15 different borrowing periods ranging from overnight to one year.

Thomson Reuters calculated the LIBOR rate by discarding the four highest and the four lowest submissions and then averaging the remaining eight submissions. It was the average which was published as the official LIBOR rate for the day. When the LIBOR rate was published, the value of trading positions and amounts of interest payable on loans linked to