Third bank to pay Louisiana over Libor manipulation
The Louisiana State Bond Commission Thursday accepted the state’s third settlement with a major investment bank over alleged fraudulent conduct involving the manipulation of Libor.
The commission unanimously agreed to receive $45,615 from Citibank for swaps tied to the London interbank offered rate on state gas and fuel tax revenue bonds.
“The request today will allow me to sign a release,” said State Bond Director Lela Folse.
The release with the Department of Justice is the commission’s agreement to terms of the settlement allowing the state to accept the funds.
Folse also said that the swaps are no longer outstanding. She didn’t elaborate about when they were taken out or whether they matured during a webcast of Thursday’s commission meeting. Documents for the discussion on Libor couldn’t immediately be obtained.
The funds from Citibank will go into the account where gas and fuel tax revenues are deposited for future use by the state Department of Transportation and Development.
Louisiana Attorney General Jeff Landry negotiated the settlement as part of a multistate investigation into deceptive trade practices involving the manipulation of interest rates on Libor-linked financial instruments.
The investigation, led by former New York Attorney General Barbara D. Underwood and California Attorney General Xavier Becerra, began in 2012 and included 45 state attorneys general.
Jacques Ambers, press secretary for Landry, said that the administration of the Citibank settlement is underway, and more details should be available when that work is completed in a few months.
“We settled with UBS regarding Libor in December of 2018,” Ambers said. “Administration of the UBS settlement is also currently ongoing.”
As part of the multistate settlement, UBS agreed to pay $68 million to the affected states. Ambers did not say how much Louisiana would receive as part of that agreement.
In November, the attorney general’s office announced a $13 million settlement with Deutsche Bank.
The State Bond Commission agreed to accept $10 million of that amount. About $7 million was for a swap related to gas and fuel bonds and $3 million was for a swap linked to state general obligation bonds.
The $7 million of Deutsche Bank settlement funds were placed into the gas and fuel tax revenue account to pay debt service, while $3 million was placed into the GO bond security and redemption fund.
Landry’s office said the remaining $3 million of the settlement went to the Louisiana Sheriffs Pension and Relief Fund, Louisiana State University, the Tulane Educational Fund and Nicholls State University.
As of December, the multistate investigation into the Libor scandal had recovered $488 million from four banks.
Citibank declined to comment on the settlement with Louisiana.