WASHINGTON, May 25 (UPI) -- Citibank N.A. ended a long-running investigation of the bank's alleged rigging of benchmark interest rates Wednesday with agreement to pay fines of $425 million.
Six European banks have settled criminal or civil claims regarding the alleged abuse of the London-based Libor benchmark rate. Citibank is the first U.S. bank to do so, and will pay a $250 million penalty to resolve claims by the federal Commodities Futures Trading Commission that the bank and its subsidiaries attempted to rig the ISDAfix benchmark and issue pertinent false reports.
The bank also agreed to pay $175 million to influence the YenLibor and EuroyenTibor rates.
Each rate is a financial benchmark used to calculate real-time interest rates. Using corporate influence to alter the rates could benefit customers and other stakeholders. The case against Citibank began in 2008, and the CFTC ruling mentioned actions in 2009 and 2009 when Citibank allegedly based its calculations on "a desire to avoid generating negative media attention and to protect Citi's reputation in the market" during the 2008 global financial crisis.
The government directive also includes demands that Citibank implement stronger procedures and internal controls.