Three UK banks seen cen­tral to Libor rig­ging

The Pak Banker - - COMPANIES/BOSS -

New de­tails from court doc­u­ments and sources close to the Libor scan­dal in­ves­ti­ga­tion sug­gest that groups of traders work­ing at three ma­jor Euro­pean banks were heav­ily in­volved in rig­ging global bench­mark in­ter­est rates.

Some of those traders, in­clud­ing one who used to work at Bar­clays Plc in New York, still have se­nior po­si­tions on Wall Street trad­ing desks.

Un­til now, most of the at­ten­tion has in­volved traders at Bar­clays, which last month reached a $453 mil­lion set­tle­ment with U.S. and UK author­i­ties for its role in the ma­nip­u­la­tion of rates. Now, it is be­com­ing clear that traders from at least two other banks - UK-based Royal Bank of Scot­land Group Plc and Switzer­land's UBS AG - played a cen­tral role.

Among them, the three banks em­ployed more than a dozen traders who sought to in­flu­ence rates in ei­ther dol­lar, euro or yen rates. Some of the traders who are be­ing probed have worked for sev­eral banks un­der scru­tiny, rais­ing the pos­si­bil­ity that the rate fix­ing be­came more in­grained as traders changed jobs.

The doc­u­ments re­viewed in an­a­lyz­ing the traders' in­volve­ment in­cluded court fil­ings by Cana­dian reg­u­la­tors who have been in­ves­ti­gat­ing po­ten­tial an­titrust is­sues; set­tle­ment doc­u­ments with Bar­clays filed by the U.S. Depart­ment of Jus­tice and the U.S. Com­mod­ity Fu­tures Trad­ing Com­mis­sion in Washington and by the Fi­nan­cial Ser­vices Au­thor­ity in the U.K.; and a pri­vate em­ploy­ment law­suit filed by a for­mer RBS trader in Sin­ga­pore's High Court.

The scan­dal, which be­gan to come to light in 2008, has be­come a time bomb for reg­u­la­tors and a big fo­cus for politi­cians on both sides of the At­lantic. At is­sue is the ma­nip­u­la­tion be­tween at least 2005 and 2009 of rates that are used to de­ter­mine the cost of tril­lions of dol­lars of bor­row­ings, in­clud­ing ev­ery­thing from home loans to credit card rates.

One for­mer Bar­clays em­ployee un­der scru­tiny, is Jay V. Mer­chant, ac­cord­ing to peo­ple fa­mil­iar with the sit­u­a­tion. Mer­chant, who over­saw the U.S. dol­lar swaps trad­ing desk at Bar­clays in New York, worked for the bank from March 2006 to Oc­to­ber 2009, ac­cord­ing to em­ploy­ment records main­tained by the U.S. Fi­nan­cial In­dus­try Reg­u­la­tory Au­thor­ity (FINRA).

Mer­chant cur­rently holds a sim­i­lar po­si­tion at UBS, where he works out of the Swiss bank's of­fices in Stam­ford, Con­necti­cut, ac­cord­ing to FINRA. He did not re­turn re­quests for com­ment.

Peo­ple fa­mil­iar with the in­ves­ti­ga­tion said author­i­ties are look­ing at whether some in­di­vid­u­als on Mer­chant's trad­ing desk tried to in­flu­ence the rate on Libor by com­mu­ni­cat­ing with other traders in Lon­don to get a higher re­turn on cer­tain swaps the desk was trad­ing. His spe­cific role is un­clear.

The Depart­ment of Jus­tice de­clined to com­ment.Mer­chant's at­tor­ney, John Ken­ney of Hoguet New­man Re­gal & Ken­ney, did not re­spond to re­quests seek­ing com­ment.A UBS spokes­woman said that the bank has "no rea­son to be­lieve Mr. Mer­chant has en­gaged in any im­proper con­duct at UBS."

The spokes­woman, who noted that Mer­chant is on a two-week va­ca­tion, de­clined to com­ment on the broader in­ves­ti­ga­tion. Bar­clays de­clined to com­ment. In a state­ment, an RBS spokes­woman said the bank is co­op­er­at­ing with the in­ves­ti­ga­tion.

Ear­lier this week, media re­ported that fed­eral pros­e­cu­tors in Washington have be­gun reach­ing out to lawyers for some of the in­di­vid­u­als un­der scru­tiny as they get closer to bring­ing pos­si­ble crim­i­nal charges.

The dol­lar and euro rate-rig­ging ap­pears to have be­gun in earnest in early 2005 in the dol­lar mar­ket, ac­cord­ing to the doc­u­ments. By Au­gust of that year, Bar­clays traders were reach­ing out to traders at other big global banks to ma­nip­u­late their rates to make them fa­vor­able to Bar­clays' trad­ing po­si­tions.

Soon, the trad­ing had crossed to the euro rate mar­kets, ac­cord­ing to the set­tle­ment doc­u­ments filed in the Bar­clays in­ves­ti­ga­tion. And by 2007, traders at RBS and UBS were seek­ing to in­flu­ence the yen rate mar­ket, ac­cord­ing to doc­u­ments filed in 2011 in Sin­ga­pore's High Court and in Canada's On­tario Su­pe­rior Court.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.