Barclay’s Bank Feels the Sting of International eDiscovery

Barclay’s Bank Feels the Sting of International eDiscovery

Author: Eric Everson, MBA, MSIT-SE (Juris Doctorate Candidate 2013)

News broke today about the $454 Million civil settlement that Barclay’s Bank reached with various international enforcement agencies.  In this settlement, Barclay’s has agreed to pay regulators around the world $454 Million to settle a probe of its manipulation of key benchmark rates known as Libor and Euribor.  This international investigation exposed a scheme that seems to stretch from the banks trading desks to senior management team.

In their settlement, Barclay’s has agreed to pay the Commodity Futures Trading Commission (CFTC), the U.S. Department of Justice (DOJ) and the U.K.'s Financial Service Authority (FSA) a total of $454 Million.  In an interesting international eDiscovery development, investigators uncovered a myriad of smoking gun emails during this investigation which revealed a conspiracy stretching from the banks trading desks to top senior management.  These emails reportedly demonstrate barking orders from the trading desks and willful compliance by the managers involved.  This scheme accused Barclay’s of attempting to manipulate the bank's true funding costs, which are key in setting short-term interest rates used in approximately $350 trillion of financial market contracts.

The joint international eDiscovery effort uncovered thousands of emails and other forms of Electronically Stored Information (ESI).  International electronic discovery is the pursuit of digitally native filetypes for use in matters of litigation that transcends international borders.  Barclay’s operates as a Multinational Enterprise (MNE) and is subject to a global standard of ESI preservation.  Multination Enterprises (MNE) are a special kind of corporation that combines multiple entities of incorporation located throughout the global marketplace and most often include at least one American corporation in the business unit hierarchy.  MNE’s are especially subject to a diverse global framework of laws, but are equally subject to a litany of international eDiscovery practices.  Through their corporate structure MNE’s are organized in such a way that generally affords them access to the most diverse conflict of laws variability, yet puts them at constant risk of defending against foreign claims.

In the midst of a global financial crisis, this news is sure to shake the confidence in the global banking industry, yet it highlights the ability of international financial regulatory agencies in identifying and resolving real-time issues.  This case stands as a bellwether of international eDiscovery and puts other MNE’s on notice with regard to the stiff penalties they may face when their activities transcend national borders.

#eDiscovery

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About the Author:  Eric Everson is a 3L law student at Florida A&M University – College of Law.  Prior to law school he earned an MBA and Masters in Software Engineering while he tenured ten years of executive leadership in the U.S. telecommunications industry.  The views and opinions presented in this blog are his own and are not to be construed as legal advice.  Eric Everson currently serves on the Board of Governors for The Florida Bar Young Lawyers Division Law Student Division and is the President of the Electronic Discovery Law Student Association at Florida A&M University – College of Law.