SocGen Is Ready To Pay Up To $1 Billion To End U.S. Probes
[et_pb_section bb_built=”1″ fullwidth=”on” specialty=”off” background_image=”https://www.newsoncompliance.com/wp-content/uploads/2018/05/1x-1-2.jpg” parallax_method=”off” module_class=”blog-header” background_color=”#ffffff” _builder_version=”3.0.98″][et_pb_fullwidth_post_title title=”on” meta=”off” author=”on” date=”on” categories=”on” comments=”on” featured_image=”off” featured_placement=”below” parallax_effect=”on” parallax_method=”on” text_orientation=”center” text_color=”light” text_background=”off” text_bg_color=”rgba(255,255,255,0.9)” module_bg_color=”rgba(255,255,255,0)” use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_padding=”100px||80px|” title_line_height=”1.6em” parallax=”on” background_color=”rgba(255,255,255,0)”]
[/et_pb_fullwidth_post_title][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”section” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” custom_padding=”20px||20px|” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” module_class=”blog-content-wrapper”][et_pb_row background_position=”top_left” background_repeat=”repeat” background_size=”initial”][et_pb_column type=”2_3″][et_pb_text background_layout=”light” use_border_color=”off” module_class=”blog-text” background_position=”top_left” background_repeat=”repeat” background_size=”initial” _builder_version=”3.0.98″]
Societe Generale SA is nearing an agreement to pay as much as $1 billion to resolve two U.S. probes — into the rigging of benchmark interest rates and allegations of bribery in Libya — according to people familiar with the matter.
The settlement deals with the U.S. Justice Department, which the people said could be announced as soon as this week, would end years of scrutiny that led to rate-rigging charges against Societe Generale traders and the departure of deputy CEO Didier Valet in March.
The Paris-based lender has agreed to pay about $800 million in penalties to U.S. and French authorities, one of the people said. The bank may also have to pay a penalty to the Commodity Futures Trading Commission, the people said.
What portion of the penalties will go to the French is still being worked out, two people said. France’s involvement in the negotiations marks a turnabout. French officials had chafed over a multibillion-dollar penalty levied by U.S. authorities several years ago against another French bank and stopped cooperating with the U.S. for a time.
Societe Generale declined to comment for this article but referred to a March 19 statement that said the bank had “entered into a phase of more active discussions” with the Justice Department and the CFTC about the probes that it hoped to resolve in the coming weeks.
While the lender said the final settlement tab wasn’t yet determined, it had set aside 2.3 billion euros ($2.8 billion) for legal risks at the end of December. About 1 billion euros of that total is allocated to the interest-rate and Libya probes, the statement said.
The Justice Department, the CFTC and France’s financial prosecutor declined to comment.
As part of a resolution, Societe Generale will enter into a deferred prosecution agreement, and a subsidiary will plead guilty in the U.S. to violations of the Foreign Corrupt Practices Act, the people said.
The settlement would be one of the biggest under the Trump administration for crimes committed at financial institutions. Attorney General Jeff Sessions, who has prioritized immigration, violent crime and opioid abuse, inherited many ongoing bank investigations from his predecessor, including a probe of trading at Deutsche Bank AG that helped move some $10 billion out of Russia.
A separate U.S. investigation into possible sanctions violations related to Societe Generale is ongoing.
The corruption case stems from the Justice Department’s investigation into whether financial firms made improper payments to secure investments from sovereign wealth funds, in violation of the Foreign Corrupt Practices Act.
In May 2017, Societe Generale agreed to pay more than $1 billion to the Libyan Investment Authority to resolve a U.K. civil dispute over the alleged bribery. One of the former bankers on the Libyan transactions reached a deal with the Justice Department to cooperate with its bribery investigation of the bank.
The French authorities’ involvement in negotiations to resolve the bribery matter shows a change of tack toward the country’s own banks. France bristled in 2014 at U.S. plans to levy as much as $10 billion in fines against BNP Paribas SA for sanctions violations, and then-President Francois Hollande raised what he called stability-threatening penalties with President Barack Obama.
In 2016, France stopped cooperating with U.S. information requests in the Societe Generale matter after deciding that doing so could hurt the country’s economy and threaten its national interest, three people familiar with the situation previously told Bloomberg.
The investigation of Societe Generale’s rate submissions grew out of a broader probe into whether global banks had fudged the daily borrowing data they provide to calculate benchmarks including Libor, which stands for the London interbank offered rate and helps determine mortgage and credit-card rates.
Documents collected by the U.S. suggest that Societe Generale executives were aware that its bankers were submitting fake U.S. dollar Libor rates, people familiar with the matter told Bloomberg last year. Such misleading numbers, which made bank borrowing costs look lower than they actually were, have been the focus of years of U.S. and European investigations, charges against more than a dozen bankers and brokers, and more than $2 billion in U.S. criminal penalties. Yet those allegations have rarely touched the upper reaches of global banks.
The departure of Valet, Societe Generale’s deputy CEO, was part of an effort to settle the manipulation case, people with direct knowledge of the matter said at the time. The exit was seen as necessary to help avert restrictions that could be placed on the lender’s U.S. businesses, one of the people said. While the Justice Department doesn’t direct an entity to fire an individual, it can reject proposed settlement offers if it determines that the company didn’t remediate.
Clues about the U.S. government’s Societe Generale probe over rate rigging can be found in an indictment filed in August against two lower-level bankers. One of the bank employees warned about problematic rate submissions in an email to executives, at least one of whom replied, according to the court documents, which didn’t identify the executives.
Artificially low rates that resulted from Societe Generale’s submissions caused more than $170 million in harm to the global financial markets, prosecutors said last year in a statement announcing the charges against the two bankers.
[/et_pb_text][et_pb_text admin_label=”Link/Source” background_layout=”light” use_border_color=”off” background_position=”top_left” background_repeat=”repeat” background_size=”initial” _builder_version=”3.0.98″]
Author: Tom Schoenberg and Fabio Benedetti Valentini
— With assistance by Gaspard Sebag, Greg Farrell, and Matt Robinson
[/et_pb_text][/et_pb_column][et_pb_column type=”1_3″][et_pb_code admin_label=”Right Sidebar” saved_tabs=”all” global_module=”48″]Coming Soon[/et_pb_code][/et_pb_column][/et_pb_row][et_pb_row make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” allow_player_pause=”off” parallax=”off” parallax_method=”off” make_equal=”off” parallax_1=”off” parallax_method_1=”off” module_class=”blog-more-articles-wrapper” background_position=”top_left” background_repeat=”repeat” background_size=”initial”][et_pb_column type=”4_4″][et_pb_text background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid” background_position=”top_left” background_repeat=”repeat” background_size=”initial”]
[/et_pb_text][et_pb_blog admin_label=”Latest Articles” fullwidth=”off” posts_number=”3″ show_thumbnail=”on” show_content=”off” show_more=”off” show_author=”off” show_date=”on” show_categories=”on” show_comments=”off” show_pagination=”off” offset_number=”0″ use_overlay=”off” background_layout=”light” use_dropshadow=”off” use_border_color=”off” border_color=”#ffffff” border_style=”solid” box_shadow_color=”rgba(0,0,0,0.3)” box_shadow_style=”none”]