Financial Market Manipulation, Whistle-Blowing and the Common Good: Evidence from the LIBOR Scandal

31 Pages Posted: 9 May 2017 Last revised: 10 May 2018

See all articles by Jonathan A. Batten

Jonathan A. Batten

Universiti Utara Malaysia

Igor Loncarski

University of Ljubljana - Faculty of Economics

Peter G. Szilagyi

Central European University; Judge Business School - University of Cambridge

Date Written: May 8, 2017


In this paper, circumstances under which the prevention of market manipulation may not ultimately serve the common good, are considered. Prevention of these crimes is necessary given their considerable economic and social impacts. Recent prosecutions for manipulation of the important LIBOR (London Interbank Offered Rate) in the international finance market are used to argue that top-down approaches to the rule enforcement of individuals and corporations, cannot ultimately succeed in preventing these types of crimes. One key concern with current regulatory approaches is that they assume individuals make rational, consequence-based decisions. This allows the abdication of individual moral responsibility in favour of institutional and regulatory guidance. The LIBOR scandal, however, shows that compliance to these rules is especially problematic in organizations plagued with self-centred, narcissistic and ruthless profit-driven cultures. Alternatively, we suggest that a bottom-up approach, which relies upon individuals acting in the interest of the common good, maybe more effective in organisational environments that are duty, as well as incentive, based. This approach requires individuals to accept a degree of moral responsibility for their actions, and to some extent the actions of others. We believe that properly motivated and instructed, individuals can think and act better than they might otherwise do despite behavioural bias.

Keywords: Financial markets, market manipulations, common good, ethical codes’ ethical policy, LIBOR scandal, whistle-blowers

JEL Classification: A29, G14, G18, G19, G29, G30, M14, O56

Suggested Citation

Batten, Jonathan A. and Lončarski, Igor and Szilagyi, Peter G., Financial Market Manipulation, Whistle-Blowing and the Common Good: Evidence from the LIBOR Scandal (May 8, 2017). Available at SSRN: or

Jonathan A. Batten (Contact Author)

Universiti Utara Malaysia ( email )

School of Economics, Finance and Banking
Sintok, Kedah 06010

Igor Lončarski

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, SI-1000
+386 5892 628 (Phone)
+386 5892 698 (Fax)

Peter G. Szilagyi

Central European University ( email )

Nador utca 9.
Budapest, 1051
+36-1-887-5092 (Phone)
+36-1-887-5005 (Fax)


Judge Business School - University of Cambridge ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44-1223-764-026 (Phone)
+44-1223-339-701 (Fax)


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