European regulators and US prosecutors are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rate-rigging scandal.
Federal prosecutors in Washington, DC, have recently contacted lawyers representing some of the individuals under suspicion to notify them that criminal charges and arrests could be imminent, said two of those sources who asked not to be identified because the investigation is ongoing.
Defence lawyers, some of whom represent individuals under suspicion, said prosecutors have indicated they plan to begin making arrests and filing criminal charges in the next few weeks.
In long-running financial investigations, it is not uncommon for prosecutors to contact defense lawyers for individuals before filing charges to offer them a chance to cooperate or take a plea, the lawyer said.
The prospect of charges and arrests of individuals means that prosecutors are getting a fuller picture of how traders at major banks allegedly sought to influence the London Interbank Offered Rate, or Libor, and other global rates that underpin hundreds of trillions of dollars in assets.
The criminal charges would come alongside efforts by regulators to punish major banks with fines, and could show that the alleged activity was not rampant in the banks.
“The individual criminal charges have no impact on the regulatory moves against the banks,” said a European source familiar with the matter. “But banks are hoping that at least regulators will see that the scandal was mainly due to misbehaviour of a gang of traders.”
In Europe, financial regulators are focusing on a ring of traders from several European banks who allegedly sought to rig benchmark interest rates such as Libor, said the European source familiar with the investigation in Europe.
The source, said regulators are checking through emails among a group of traders and believe they are now close to piecing together a picture of how they allegedly conspired to make money by manipulating the rates.
The investigation, which has been going on for three years, has quickened since Barclays agreed last month to pay $453 million (Sh38 billion) in fines and penalties to settle allegations with regulators and prosecutors that some of its employees tried to manipulate key interest rates from 2005 through 2009.