US PROSECUTORS and European regulators are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rigging scandal.
Federal prosecutors in Washington, DC, have recently contacted lawyers representing some of the suspects to notify them that criminal charges and arrests could be imminent, said two of those sources, who asked not to be identified because the investigation is ongoing.
Defence lawyers, some of whom represent suspects, said prosecutors have indicated they plan to begin making arrests and filing criminal charges in the next few weeks. The prospect of charges and arrests means prosecutors are getting a fuller picture of how traders at major banks allegedly sought to influence the London Interbank Offered Rate, or Libor, and other global rates that underpin hundreds of trillions of dollars in assets.
The criminal charges would come alongside efforts by regulators to fine major banks, and could show that the alleged activity was not rampant at the lenders.
“The individual criminal charges have no impact on the regulatory moves against the banks,” said a European source familiar with the matter. “But banks are hoping that at least regulators will see that the scandal was mainly due to individual misbehaviour of a gang of traders.”
In Europe, financial regulators are focusing on a ring of traders from several European banks who allegedly sought to rig benchmark interest rates such as Libor, said the source familiar with the investigation in Europe.
The source said regulators are checking e-mails among a group of traders and believe they are close to piecing together a picture of how the suspects allegedly conspired to make money by manipulating rates.
The rates are set daily based on an average of estimates supplied by a panel of banks.
“More than a handful of traders at different banks are involved,” said the source familiar with the investigation by European regulators. There are also probes in Europe concerning Euribor, the Euro Interbank Offered Rate.
It is not clear on which individuals and banks federal prosecutors are most focused.
It was reported previously that more than a dozen current and former employees of several large banks, including Barclays, UBS and Citigroup, are under investigation and have hired lawyers over the past year as a federal grand jury in Washington, DC, continues to gather evidence. Activity in the Libor investigation, which has been going on for three years, has quickened since Barclays agreed last month to pay $453 million in fines and penalties to settle allegations with regulators and prosecutors that some of its employees tried to manipulate key interest rates from 2005 through 2009.
The investigation is also looking at the activities of employees at HSBC, Deutsche Bank and other major lenders. – (Reuters)
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