Global banks like UBS and RBS conspired to manipulate interest rates against school teachers?

Imagine a fifth-grade teacher, Mrs. Gable. The one who stayed late to help with fractions. The high school history teacher who made the past come alive. The librarian who knew just the right book to spark a love of reading. They work for decades, trusting that their pension, their nest egg, will be there for them. They place their faith in a system.

That faith was betrayed.

The California State Teachers’ Retirement System, or CalSTRS, manages the retirement funds for over a million of these educators.

They invested that money, as pension funds do, in what are supposed to be stable, reliable financial instruments. They made a bet on a fair market. What they didn’t know was that the game was rigged against them from the start.

The Secret Handshake That Cost Millions

Let’s get one thing straight. The world of high finance loves complexity. It thrives on jargon and acronyms designed to make your eyes glaze over. But the scheme that hurt California’s teachers was, at its heart, shockingly simple. It was about lying.

It all centers on a number you’ve probably never heard of: Euribor. Think of it as a secret daily handshake between the world’s biggest banks. It’s the interest rate they supposedly charge each other for loans in Euros, and it’s a bedrock number that influences the price of countless financial products worldwide. Honesty is the entire point. The system only works if everyone reports their numbers truthfully.

But between 2005 and 2011, a group of powerhouse banks, including giants like UBS and The Royal Bank of Scotland (RBS), decided that honesty was bad for business. Their traders, the ones managing massive bets on complex financial products called derivatives, realized they could make a lot more money if they could just nudge that Euribor number up or down whenever they wanted.

So they colluded. Through phone calls, in-person meetings, and industry schmooze-fests, traders from competing banks coordinated their Euribor submissions to manipulate the final rate. They weren’t just guessing; they were working together.

In one chat message dug up in the investigation, a trader at RBS crowed to his old colleagues that “rbs and ubs are going to do everything to put [Euribor] to the… sk[y]”. They were pushing the thumb on the scale, and they knew it.

The Ripple Effect: From a Rigged Number to a Raided Nest Egg

So what? A bunch of traders in Europe fudged a number. Who cares?

You should. California’s teachers should. Because that rigged number had a direct impact on their retirement fund. CalSTRS had entered into hundreds of transactions with UBS and RBS—the very banks at the heart of the conspiracy. These were derivatives whose prices were set by a formula that used Euribor.

When the banks secretly conspired to artificially inflate Euribor, CalSTRS paid more than it should have. When they pushed it down, the fund got less than it deserved. It was a slow, quiet, digital pickpocketing scheme executed on a global scale.

The result was the same: money that should have gone toward securing a teacher’s retirement instead went into the pockets of a bank that was cheating.

The markets we depend on for everything from our mortgages to our 401(k)s are built on a promise of fairness. This case shows that promise can be a convenient lie when massive profits are on the line.

A System Built for Cheating

It’s tempting to blame a few rogue traders, a couple of “bad apples.” But that almost literally misses the forest for the trees.

The attached down below court documents hint at a much deeper problem. The victims claimed that bank management fostered this behavior by creating trading desks where manipulation was encouraged, implementing laughably lax compliance standards, and hiding evidence from regulators .

This was a feature of a system obsessed with short-term gains.

The modern financial world, with its lightning-fast trades and derivatives so complex they defy easy explanation, is a perfect breeding ground for this kind of misconduct. It creates a smokescreen that allows a small group of insiders to game the rules, all while the real-world consequences—a less secure retirement for a public school teacher—remain invisible.

The Long, Winding Road to Nowhere Justice

So, the banks got caught. Justice was served, right? Not exactly.

What followed was a legal marathon. The banks’ first move wasn’t to apologize; it was to try to get the case thrown out on a technicality. They argued that because they were foreign banks, a U.S. court had no power over them. And for many of the banks involved, it worked. They walked away.

Even against UBS and RBS, the path was a minefield. The court threw out the racketeering (RICO) claims, a law designed to fight organized crime, because the teachers’ fund couldn’t pinpoint the exact fraudulent message tied to each of their hundreds of individual transactions. It’s a burden of proof so high it’s almost impossible to meet, a perfect shield for corporate wrongdoers engaged in widespread deception.

After years of fighting, the teachers’ antitrust claims were allowed to proceed. But the message was clear: for massive corporations, justice isn’t a reckoning. It’s a negotiation. It’s a war of attrition. They can use their immense resources to delay, deflect, and diminish until the punishment, if it ever comes, feels like little more than a cost of doing business.

What Real Justice Looks Like

This story is ultimately about a fundamental question: who is our economy for? Is it for the people who create real value—the teachers, the firefighters, the nurses—or is it for the financial wizards who have figured out how to profit from a rigged game?

If we want to prevent the next scandal, we need more than just a fine. We need real, systemic change. That means robust international regulations with actual teeth. It means holding individual executives accountable, not just slapping the corporation with a fine that amounts to pocket change. It means demanding radical transparency in our financial markets.

And most of all, it means remembering who the system is supposed to serve. It’s supposed to serve the teacher who trusts that her pension will be safe. It’s time we built a system that honors that trust, instead of betraying it.

All factual claims in this article are sourced from the United States Court of Appeals for the Second Circuit opinion in Sullivan v. UBS AG, No. 19-1769, decided August 22, 2025.