Three British men, including a former UBS trader and two employees of interdealer broker RP Martin, have become targets of the first arrests in a sprawling worldwide probe into manipulation of the London interbank offered rate.

The UK’s Serious Fraud Office (SFO) said yesterday it had arrested three men, aged 33, 41 and 47, and the suspects were “all British nationals currently living in the United Kingdom”. Tom Hayes, who has previously worked at both UBS and Citigroup, is one of those arrested, two people familiar with the investigation said.

Mr Hayes’s lawyer was unavailable to comment. UBS and Citi both declined to comment.

The RP Martin employees are Terry Farr and Jim Gilmour. They have been on leave from the firm for close to a year. RP Martin declined to comment except to say that the interdealer broker itself was not under investigation.

Lawyers for the two men could not be immediately reached.

The SFO made the arrests with the assistance of the City of London police after searching homes in Essex and Surrey. The suspects were being questioned in a London police station. The fraud office and the police both declined to comment further beyond the statement.

The arrests mark a ratcheting up of the Libor probe, where about 10 authorities across the globe are scrutinising some 20 banks and other financial institutions, including interdealer brokers.

The SFO said in the summer that it would undertake a criminal investigation into the manipulation of Libor and other benchmark rates after the UK financial regulator, the Financial Services Authority, and US authorities fined Barclays a record £290 million. The SFO is investigating traders at Barclays and other banks.

The subsequent political furore cost Barclays’ former chief executive Bob Diamond his job, among others.

UBS and the Royal Bank of Scotland are both hoping to settle with the US and the FSA – possibly before Christmas. – Copyright The Financial Times Limited 2012