Libor Latest: Investigation Widens



The UK’s Serious Fraud Office (or, SFO) is investigating an additional 22 people in connection with the Libor scandal according to Bloomberg.  The lawyer for one of the twenty-two says their client may be facing charges in the U.S. as well. Libor, or London Interbank Offered Rated, is a financial benchmark.

It is the rate at which lenders can borrow money, and sixteen international banks are used in compiling the rate, which is done each morning by Thompson-Reuters Corporation (NYSE: TRI). A BBC timeline of the scandal places the first inklings of evidence in 2005, when Barclays PLC (NYSE: BCS) tried to manipulate rates. Locations of implicated offices include Tokyo, London, and New York City.

In 2012, seven banks officially received notice of investigation by U.S. authorities. The scandal has engulfed a slew of senior officials, and brought millions of dollars of fines to banks. Previously, the BBC covered the resignation of Barclays’s CEO Bob Diamond , as well as Barclays being fined 290 million pounds (over $460 million) by regulators in the U.S. and the UK.

The Telegraph says there are sixty investigators working on the Libor case, which is widening beyond the three men already under investigation: Tom Hayes, James Gilmour, and Terry Farr. Hayes formerly worked for UBS AG (NYSE: UBS) and Citigroup Inc (NYSE: C). Gilmour and Farr were brokers at RP Martin Holdings.

Pleas were expected to be entered by the men in court October 21. Instead, the hearing ultimately revolved around the injunction of the twenty-two additional people under investigation, and another hearing date later this year has been scheduled.

Hayes, Financial News says, is likely to plead “not guilty” in the London court. Prosecutors want Hayes to plead guilty and then testify against the other parties involved. Hayes is also facing charges in the U.S. The Telegraph dates Hayes’s alleged collaboration to fix the rate between 2006 and 2010, when he was working in a Tokyo-based UBS office.

Last month, Bloomberg reported that a U.S. federal court in Connecticut ordered UBS Securities Japan to pay a $100 million fine in connection to the Libor case. UBS Securities Japan was the only subsidiary of UBS not covered by a non-prosecution agreement between the bank and the U.S.

The potential co-conspirators received notification of the investigation last week, the New York Times Dealbook reports. As the investigation expands, the Libor rate is moving next year from Thompson Reuters to NYSE Euronext Inc. (NYSE: NYX). Under this system, Financial Times explains, the user pays for the data. Thompson Reuters had calculated the Libor rate for thirty years.

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