The settlement raises fresh questions about the reliability of the London interbank offered rate, or Libor, which underpins some $360 trillion of loans and financial contracts.

The attempted manipulation, which according to authorities took place from 2005 through 2009, meant that millions of borrowers paid too little or too much interest on their debt.

The U.S. government implicated senior executives at Barclays in its settlement. It cited reams of emails that showed how the bank sought to move Libor rates to profit on trades and to hide its high borrowing costs during the financial crisis.

Barclays Chief Executive Bob Diamond acknowledged on Wednesday that the settlement would damage customer trust in the bank. He said he and other senior executives would forgo their bonuses this year. Much of the improper trading and manipulation occurred under the watch of Diamond, a fixed-income trader who replaced John Varley as CEO in 2011.

Libor underlies everything from derivatives trades to U.S. consumer credit card rates to loans as far afield as those financing Turkish phone networks. Barclays also tried to manipulate Euribor, a separately managed series of euro-denominated rates.

The bank settled on a civil basis with the U.S. Commodity Futures Trading Commission, the U.S. Department of Justice and the U.K.'s Financial Services Authority. The Justice Department is still conducting a criminal investigation.

The broader Libor probe dates to at least 2011 and includes Japanese, Canadian and Swiss authorities.

Last year, Swiss bank UBS AG agreed to cooperate with U.S. investigators in exchange for conditional immunity from prosecution. Earlier this year, in court documents filed in Ontario Superior Court, a Canadian antitrust regulator said that a "cooperating party" had provided information on how the alleged Libor manipulation took place.

The Barclays settlement puts pressure on other banks to follow suit, a former U.S. prosecutor said.

"I don't think there is any question that the industry's total cost when you throw in class actions, regulatory settlements, going-forward compliance and even the professional fees associated with the defense of these matters, will be well into the tens of billions of dollars," said Jacob Frenkel, a partner at Shulman Rogers in Potomac, Maryland.

ON THE "BIG BOY" TRAIL

Investigators were helped by the extensive email traffic among Barclays employees involved. In one email, after a Barclays swaps trader asked for low levels to be reported on certain short-term rates, an employee who submitted rates for the survey responded by email, "Done ... for you big boy ..."

Market participants said that fewer traders have faith in Libor as a benchmark now.

"There isn't really a lot of trust in the way Libor is calculated as ... there were some banks who used to manipulate the rates just to get better conditions in the money market," said ING rate strategist Alessandro Giansanti in Amsterdam.

The series of interest rates are determined based on a daily poll of banks regarding their estimated borrowing costs. Libor is so deeply entrenched in financial markets that there are few plausible alternatives, experts have said.

SENIOR EXECUTIVES INVOLVED

Barclays shares closed 1.9 percent higher in London, as shareholders said they were satisfied the issue was closed.

In a statement, Barclays said the settlement related to past actions that fell "well short of the standards" the bank sought to uphold for its business.

"I am sorry that some people acted in a manner not consistent with our culture and values," Diamond said.

Diamond joined the bank in 1996 and established Barclays as a leading investment bank.

Before taking over as CEO, Diamond had been president and chief of Barclays' investment bank. The other officials who will forgo a bonus this year are finance chief Chris Lucas, chief operating officer Jerry del Missier, and Rich Ricci, chief executive of corporate and investment banking.

Damning emails that regulators released on Wednesday make clear that traders and the "submitters" tasked with reporting daily rates worked together for years to make the rates submitted suit the traders' and the bank's purposes.

In some cases, submitters set themselves reminders on their calendars to submit low rates on certain dates, according to the emails. In others, traders expressed overwhelming gratitude for low submissions that protected them from losses.

Around when the market for short-term debt known as commercial paper seized up in the fall of 2007, top Barclays treasury executives held a conference call with the desk responsible for submitting Libor, according to the CFTC order.

The person responsible for posting Barclays' borrowing rate said in a November 2007 phone call that if the bank submitted a correct rate, it would be higher than other banks and cause "a shit storm." According to the CFTC order, "The supervisor asked that the issue be taken ‘upstairs,' meaning that it should be discussed among more senior levels of Barclays' management."

Ultimately, the bank provided a lower rate that was the same as a competing bank.

RECORD FINES

The CFTC ordered the bank to pay a $200 million penalty, the largest civil monetary penalty it has ever imposed.

Barclays also settled with the U.S. Department of Justice and Britain's Financial Services Authority; it will pay fines of $160 million and $92.8 million, respectively. The FSA fine was also a record.

The Department of Justice said Barclays was the first bank being probed "to provide extensive and meaningful cooperation to the government," adding that the bank's assistance had aided its criminal investigation.

Though the Justice Department did not use words like "conspiracy" or "fraud" in its statement of facts, one lawyer not related to the case said that was likely a courtesy to Barclays as much as anything else.

"The DOJ did not want to back Barclays into a corner (by) using some of the more terrifying words from the criminal lexicon. I think it was very much a way to give Barclays a face-saving opportunity to resolve the situation," said Anthony Sabino, a professor of law at St. John's University.

"NO ONE'S CLEAN-CLEAN"

Libor is set daily for 10 major currencies and 15 borrowing periods, ranging from overnight loans to 12 months.

Thomson Reuters Corp is the British Bankers' Association's official agent for the daily calculation and publishing of Libor. The company said it continues to support the BBA in calculating and distributing Libor rates.

An economist who has studied Libor manipulation said that banks should be surveyed about their actual borrowing costs, instead of their estimated borrowing costs.

"Estimates are much easier to manipulate," said Rosa Abrantes-Metz, a principal at Global Economics Group and an adjunct professor at NYU's Stern School of Business.

The CFTC order suggested that the BBA knew of problems. In 2008, according to the CFTC order, a Barclays treasury executive told the BBA the bank hadn't reported accurate borrowing costs.

"We're clean, but we're dirty-clean, rather than clean-clean," the executive told an unnamed BBA manager, who responded, "No one's clean-clean."

The BBA, for its part, said the news would figure into its ongoing review of the structure of Libor.

"This is an announcement with extremely serious implications which need to be carefully considered and the investigation findings will be fully included in the current review of Libor," the association said.

Other banks involved in the probe include Citigroup, HSBC, Royal Bank of Scotland and UBS.

Several banks have suspended traders over the investigations. No criminal charges have been filed.

Even if banks settle with regulators, they still must contend with litigation now wending its way through federal court in New York.

(Reporting by Steve Slater, Kirstin Ridley, Sarah White, Carrick Mollenkamp, Jed Horowitz, Alexandra Alper, Tom Hals and Karey Wutkowski; Writing by Carrick Mollenkamp and Ben Berkowitz in New York, and Kirstin Ridley in London; Editing by John Wallace, Matthew Lewis, Tim Dobbyn and Jan Paschal)

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