Tuesday

21st Nov 2017

Rate-fixing bankers to face jail under new EU rules

Bankers caught manipulating the Libor exchange rate could face a minimum five-year jail term under new EU legislation.

The provisions included in the proposed market abuse law were adopted by 39 votes to 0 with a single abstention in a vote by the parliament's economic and monetary affairs committee on Monday (9 October).

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Arlene McCarthy, the centre-left MEP piloting the bill through parliament, described the move as "a key step along the road to reforming the financial sector."

MEPs will now seek a swift deal with EU government ministers by Christmas, with a view to implementing the legislation in 2013.

For her part, McCarthy said: "The Libor scandal has demonstrated that the culture in the financial sector has not changed and that they cannot be trusted to self-regulate."

Sven Giegold, the finance spokesman for the Green group, said that the sanctions would act as "compelling deterrents against these unethical financial practices."

However, member states are thought to be uneasy about setting minimum jail terms at EU level.

The inclusion of criminal sanctions for interest rate fixing and manipulating other financial benchmarks had been announced by internal market commissioner Michel Barnier in July.

But the European Ccommission had steered clear of setting sanction levels, with justice commissioner Viviane Reding claiming that the EU treaties only allow European law-makers to agree on definitions of criminal conduct rather than sanctions themselves.

The move was provoked by the Libor rate-fixing scandal which made headlines over the summer, with a string of major banks in the US and the EU implicated in keeping the rate artificially high.

Libor, the interest rate at which banks lend to each other, determines the price of an estimated $800 trillion worth of financial instruments.

So far, regulators in Europe and the US are determining financial sanctions to be imposed on the banks involved.

The scandal also saw the resignation of Barclay's boss Bob Diamond after the British banking giant was fined £280 million for its involvement.

Prior to the MEPs' vote, an opinion poll by YouGov on behalf of campaign group Avaaz revealed that 89 percent of Europeans wanted to see financiers who commit fraud or manipulate markets face criminal sanctions.

The poll sampled 3,700 people in Germany, France and the UK. Avaaz also presented MEPs with a petition demanding sanctions signed by 720,000 Europeans.

The survey indicated public perception that governments enjoyed a cosy relationship with big banks.

Two thirds of Britons and Germans claimed that governments mainly listened to the banking giants when drawing up financial regulation.

The poll also revealed divided public opinion as to whether criminal sanctions should be established at national or EU level.

Only 41 percent of Britons agreed that common legal rules for criminal sanctions should be established at EU level, with 48 percent saying that the issue should be left to individual countries. Meanwhile, a majority of French and German respondents backed EU-level rules.

Focus

EU bans 'geo-blocking' - but not (yet) for audiovisual

Online retailers will no longer be able to discriminate against potential customers based on their location in the EU, but the phrase 'this video is unavailable in your region' will remain a common sight in Europe.

Stakeholders' Highlights

  1. ILGA EuropeFreedom of Movement For All Families? Same Sex Couple Ask EU Court for Recognition
  2. European Jewish CongressEJC to French President Macron: We Oppose All Contact With Far-Right & Far-Left
  3. EPSUWith EU Pillar of Social Rights in Place, Time Is Ticking for Commission to Deliver
  4. ILGA EuropeBan on LGBTI Events in Ankara Must Be Overturned
  5. Bio-Based IndustriesBio-Based Industries: European Growth is in Our Nature!
  6. Dialogue PlatformErdogan's Most Vulnerable Victims: Women and Children
  7. UNICEFEuropean Parliament Marks World Children's Day by Launching Dialogue With Children
  8. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  9. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure
  10. Nordic Council of MinistersNordic countries prioritise fossil fuel subsidy reform
  11. Mission of China to the EUNew era for China brings new opportunities to all
  12. ACCASmall and Medium Sized Practices Must 'Offer the Whole Package'

Latest News

  1. 1.3 million European citizens in call for glyphosate ban
  2. EU 'cannot afford' lengthy German deadlock
  3. David Miliband: EU should take over 500,000 refugees
  4. EU bans 'geo-blocking' - but not (yet) for audiovisual
  5. EU monitoring of Libyan coastguard done by Libyans
  6. Greek opposition leader promises end to 'surreal' era
  7. Refugee case could topple Slovenia government
  8. Leak: EU states weaken post-Dieselgate testing