Barclays and the Libor: Anatomy of a Scandal

Barclays and the Libor: Anatomy of a Scandal

By
Ken Shotts, Sheila Melvin
2013|Case No.ETH-03| Length 15 pgs.

On June 27, 2012, the storied British bank Barclays admitted that it repeatedly attempted to rig the London Interbank Offered Rate (LIBOR) over a four-year period from 2005-2009. In its settlement, Barclays agreed to pay $453 million in fines and penalties to bank regulators in the U.K. and U.S. The media decried Barclays’ rate-rigging efforts as “the scandal of all scandals” and bemoaned the spread of “Wall Street sleaze.” By late 2012, dozens of other banks did indeed face LIBOR-rigging inquiries by regulators in various countries. This case delves into the scandal, exploring how the rate-rigging worked, who knew what when, and how the blame was laid, allowing students to explore the social and situational pressures involved in the rigging of the LIBOR.

Learning Objective

This case encourages students to consider individual and organizational responsibility; strategies that could have been adopted by both individuals and organizations; and the normative and strategic implications of various decisions taken during the rigging of the LIBOR. Through the process of discussing the case, students should also come to understand the necessity of being upfront about issues they do not understand, and the importance of this in ethical decision-making. Through the use of anonymous surveying techniques, students should further gain a sense of their own heterogeneity and of the diversity of opinion that exists on issues such as this, regardless of what stance might be expressed in public.

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