Three major European banks seen involved in Libor rigging

Groups of traders working in three major European banks were found involved in rigging global benchmark interest rates, a report said on Saturday.

Zeebiz Bureau

New Delhi: Groups of traders working in three major European banks were found involved in rigging global benchmark interest rates, a report said on Saturday.

According to a news agency, reports from court documents and sources who are actively involved in the investigation of the Libor scandal has suggested that some traders working with banks like Barclays, Royal Bank of Scotland and UBS are involved in the rigging.

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 USD 453 million settlement with US 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.

Between 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 by a news agency 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 US Department of Justice and the US Commodity Futures Trading Commission in Washington and by the Financial Services Authority in the UK; 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, Reuters has learned, is Jay V. Merchant, according to people familiar with the situation. Merchant, who oversaw the US 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 US 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.

With Agency Inputs