Libor probe engulfs bank traders

( AFP Photo / Yasuyoshi Chiba )
US and UK regulators are investigating several groups of traders around the world for allegedly teaming up to rig interest rates.

More than a dozen traders from at least nine banks are under investigation, the Wall Street journal writes, citing people close to the probe.

From 2005 to 2011, they allegedly profited by manipulating Libor and other key interest rates. The practice spread as some of the traders moved to other banks and took the conspiracy with them.

The interest rates are used as global benchmarks in determining rates on many types of consumer and business loans.

The emerging details suggest there’s been a widespread conspiracy that continued for several years. As a result, the banks where the traders worked are under growing pressure to explain what they knew.

The suspected rate-rigging comes on top of allegations that some banks made artificially low submissions for setting Libor during the financial crisis.

Britain’s Barclays, where traders were allegedly promised bottles of Bollinger as rewards for rate fixing, already paid about $450 million. The bank admitted some traders and executives tried to fix the London interbank offered rate, or Libor, and other interest rates.

The widening interest-rate scandal cost Barclays Chief Executive Bob Diamond his job and sparked a political firestorm in the U.K. and US.

On Monday, a top House Republican prodded the Federal Reserve Bank of New York for more documents about its response to "admissions of market manipulation" by banks that helped set rates.

No criminal charges have been filed against any of the traders or their bosses. But some legal experts said they believe that a growing collection of email, instant messages and other evidence makes some of the traders vulnerable to prosecution.

According to people close to the investigation one of the probe's biggest targets is a group of traders who were allegedly coordinated by Thomas Hayes. Hayes worked for UBS from 2006 to 2009 and then moved to Citigroup and was fired from the bank in 2010,

He allegedly worked with other traders to push submissions up or down for a benchmark interest rate called yen Libor.

According to Canadian court documents the alleged ring includes traders working at six of the 16 banks that set the daily yen Libor rate.

The banks are Citigroup, Deutsche Bank, HSBC, J.P. Morgan Chase, RBS and UBS. The traders no longer work at those banks.