Former UBS and Citigroup banker and two others questioned as part of Serious Fraud Office investigation into Libor manipulation
A former UBS and Citigroup banker and two others had their homes raided early on Tuesday morning and were taken in for questioning as part of the Serious Fraud Office investigation into the manipulation of Libor interest rates.
The intervention came amid mounting speculation that the Financial Services Authority is preparing to take action against a number of banks in relation to Libor setting.
The SFO and City of London police arrested three men aged 33, 41 and 47 after searching a house in Surrey and two properties in Essex. The three were taken to a London police station to be interviewed “in connection with the investigation into the manipulation of Libor”.
The three are understood to be Tom Hayes, who has worked for a number of banks including UBS and Citigroup, and two men who worked for City-based inter-dealer broker RP Martin – Terry Farr and Jim Gilmour. They are either on leave or have left the company. Citi and UBS declined to comment. RP Martin stressed it was co-operating with the authorities but not under investigation.
A lawyer for Farr declined to comment, while Gilmour and Hayes could not be contacted. It was anticipated the three would be release on police bail after questioning without being charged.
The SFO’s investigation into Libor rigging was sparked by the £290m fine for Barclays in June, which led to the departures of chairman Marcus Agius, chief executive Bob Diamond and newly promoted chief operating officer Jerry del Missier.
Investigators working in collaboration with multiple parallel inquiries around the world are racing to establish the international reach of alleged Libor manipulation rings.
Hayes, who had been based in Tokyo during his 10 months with Citi, was let go by the bank. This was about the same time as the Japanese regulator sanctioned the firm following a probe into alleged manipulation of the yen-based interest rates.
The director of the SFO, David Green, has told MPs that he knows the agency will be largely judged on the success of the Libor investigation and had deployed 40 staff on the cases which involve more than one firm.
The SFO announced a formal investigation into the complex rate-rigging affair on 6 July and by the end of that month had already concluded it had the powers to conduct a criminal investigation.
While the Financial Services Authority and regulators in the US have fined Barclays, individuals involved have not been formally named or reprimanded. Barclays’ head of investment banking, Rich Ricci, told the banking standards committee that it had “terminated the employment” of five people and that 13 staff had been disciplined in total.
Barclays is so far the only bank the regulators have penalised, but speculation is rife that other banks will face penalties before the end of the year. The FSA said that eight financial firms in total, and not just banks, were the subject of investigations by the City regulator. UBS and Royal Bank of Scotland are among those in settlement talks with the FSA that could reach a conclusion shortly.
Terry Smith, chief executive of City broker Tullett Prebon, said: “At the time I was astonished that no one thought those involved in Libor manipulation could be prosecuted without new and specific legislation. It is a modern illusion that an act cannot be prosecuted as a crime just because there is not a specific piece of legislation which proscribes it. We have some perfectly good laws, they just need to be applied.”