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• Case | HBS Case Collection | 2013 (Revised from original 2013 version)

  Barclays and the LIBOR Scandal

  Clayton S. Rose and Aldo Sesia

  In June of 2012, Barclays plc admitted that it had manipulated LIBOR—a benchmark interest rate that was fundamental to the operation of international financial markets and that was the basis for trillions of dollars of financial transactions. Between 2005 and 2009 Barclays, one of the world's largest and most important banks, manipulated LIBOR to gain profits and/or limit losses from derivative trades. In addition, between 2007 and 2009 the firm had made dishonestly low LIBOR submission rates to dampen market speculation and negative media comments about the firm's viability during the financial crisis. In settling with U.K. and U.S. regulators the firm agreed to pay $450 million in fines. Within a few days of the settlement, Barclays' CEO, Robert Diamond, had resigned under pressure from British regulators. Diamond blamed a small number of employees for the derivative trading related LIBOR rate violations and termed their actions as "reprehensible." As for rigging LIBOR rates to limit market and media speculation of Barclays' financial viability, Diamond denied any personal wrongdoing, and argued, that if anything, Barclays was more honest in its LIBOR submissions than other banks—questioning how banks that were so troubled as to later be partly nationalized could appear to borrow at a lower rate than Barclays. This case explains why LIBOR was an essential part of the global financial market, the mechanism used to establish the rate, and what Barclays did wrong. The case allows for an examination of: i) the consequences of violating the trust of market participants, ii) cultural and leadership flaws at Barclays'; iii) the challenge of effectively competing in a market where systemic, and widely understood, corruption is taking place, iv) the complicity of regulators in perpetuating a corrupt system; v) what might, or might not, be effective remedies for the systemic flaws in LIBOR.

  Keywords: financial systems; financial services; ethics; corruption; regulation; culture; leadership; general management; Banking Industry; Financial Services Industry; United Kingdom;

  Citation:

  Rose, Clayton S., and Aldo Sesia. "Barclays and the LIBOR Scandal." Harvard Business School Case 313-075, April 2013. (Revised from original January 2013 version.)

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• Supplement | HBS Case Collection | 2013 (Revised from original 2012 version)

  V-Cola: Confidential Instructions for Price Down

  Ian Larkin

  This is information for one of the six roles to be used in the V-Cola negotiation exercise. Please see V-Cola General Instructions (912043) and Teaching note (912042) for full information.

  Citation:

  Larkin, Ian. "V-Cola: Confidential Instructions for Price Down." Harvard Business School Supplement 912-049, April 2013. (Revised from original March 2012 version.)

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• Article | Organization Science | March–April 2013

  Language Matters: Status Loss & Achieved Status Distinctions in Global Organizations

  Tsedal Neeley

  How workers experience and express status loss in organizations has received little scholarly attention. I conducted a qualitative study of a French high-tech company that had instituted English as a lingua franca, or common language, as a context for examining this question. Results indicate that nonnative English-speaking employees experienced status loss regardless of their English fluency level. Yet variability in their self-assessed fluency—an achieved status marker—was associated with differences in language performance anxiety and job insecurity in a non-linear fashion: those who believed they had medium level fluency were the most anxious compared to their low and high fluency co-workers. In almost all cases where they differed, self-assessed rather than objective fluency determined how speakers explained their feelings and actions. Although nonnative speakers shared a common attitude of resentment and distrust toward their native English-speaking co-workers, their behavioral responses—assertion, inhibition, or learning—to encounters with native speakers differed based on their self-perceived fluencies. No status differences materialized among nonnative speakers as a function of diverse linguistic and national backgrounds. I discuss the theoretical and practical implications of these findings for status, achieved characteristics, and language in organizations.

  Keywords: Organizations; Status and Position; Loss; Spoken Communication; Emotions; Attitudes; Behavior;

  Citation:

  Neeley, Tsedal. "Language Matters: Status Loss & Achieved Status Distinctions in Global Organizations." Organization Science 24, no. 2 (March–April 2013): 476–497.

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