Under the leniency program overseen by the U.S. Department of
Justice's antitrust division, timing is everything. The first
company to spill the details of an antitrust conspiracy to
government lawyers is the one that reaps the rewards, most
notably immunity from criminal prosecution for antitrust
violations -- and no fine or penalty. Coming in second, even if
it's a matter of minutes, doesn't bring a defendant any
guaranteed benefits.
In the U.S. government's investigation into the manipulation
of major interbank lending rates, including the London Interbank
Offered Rate, or Libor, UBS has been widely believed to be the
winner of the leniency sweepstakes. UBS disclosed in securities
filings last year that it had received leniency or conditional
immunity from various authorities, including the Justice
Department's antitrust division, in connection with the
rate-rigging probe.
So it was a bit of a head-scratcher last month when Barclays
said it had also been granted conditional leniency from the
antitrust division, which, as it happens, was not part of
Barclays $453 million agreement with U.S. and British
authorities to settle allegations that it manipulated key
interest rates.
How can more than one company receive antitrust leniency in
the same investigation? The answer may be that the Justice
Department sees multiple rate-rigging conspiracies involving
various different interbank lending benchmarks. That's what the
UBS and Barclays disclosures suggest: UBS has said it received
antitrust leniency for its submissions of Yen Libor and Euroyen
Tokyo Interbank Offered Rates, or Tibor. Barclays, on the other
hand, said its leniency deal involved instruments that reference
the Euro Interbank Offered Rate, or Euribor.
And there may be more antitrust amnesty recipients yet to
come. Under a program known as "Amnesty Plus," a company that is
too late to receive leniency in one antitrust conspiracy can
improve the terms of its plea deal by reporting its involvement
in a separate conspiracy. If UBS beat Barclays to Yen Libor
amnesty, for instance, Barclays might have reported Euribor
manipulation under Amnesty Plus. You can imagine how the string
could play out: a chain of banks receiving Amnesty Plus deals
for reporting various conspiracies to manipulate different
benchmark indexes. (Under such agreements, a company does not
pay any fine for its role in the conspiracy it brought to the
government's attention, and none of its employees, officers or
directors are be subject to prison terms if they admit their
participation in the scheme.)
It's unclear whether Barclays or UBS is a beneficiary of the
Amnesty Plus program. An attorney at Sullivan & Cromwell, which
represents Barclays, did not return a call seeking comment, and
lawyers at Gibson, Dunn & Crutcher, which represents UBS in
civil antitrust litigation, declined to comment.
It's also unclear what kind of protection the admitted
leniency applicants will receive for cooperating with antitrust
prosecutors. Historically, the antitrust division has showed a
reluctance to enter into non-prosecution agreements with
companies under investigation. The non-prosecution agreement
that Barclays signed last month was with the Department of
Justice's fraud section and did not involve the antitrust
division. UBS has yet to make any settlements with the
government.
What is clear is that both UBS and Barclays have potentially
narrowed their liability relating to the scandal. So far, the
antitrust division has not announced any settlements with any of
the banks targeted in the investigation. If and when there are
settlements over alleged conspiracies to manipulate interbank
rates, we'll have a better understanding of the value of their
leniency agreements.
(Reporting by Andrew Longstreth)
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