What is the role of public enforcement in preventing widespread financial market miscon- duct? We study this question using the events surrounding the manipulation of the London Interbank Offer Rate (Libor). We find pervasive evidence consistent with banks misreporting Libor submissions to profit from Libor-related positions in the full sample 1999-2012. The evidence is initially stronger for banks incorporated outside the U.S., where enforcement is historically weaker, and it disappears in the aftermath of Libor investigations. Overall, our results suggest that improvements in public enforcement can be effective in deterring financial market misconduct.publishe
