JPMorgan Chase & Co. (JPM:US) and Barclays Plc (BARC) are among seven banks subpoenaed in New York and Connecticut’s investigation into alleged manipulation of Libor, according to a person familiar with the matter and company filings.
Subpoenas were sent in recent weeks to Deutsche Bank AG (DBK), Royal Bank of Scotland Group Plc and HSBC Holdings Plc (HSBA) in addition to JPMorgan and Barclays, the person said yesterday. Citigroup Inc. (C:US) and UBS AG (UBSN) received subpoenas earlier this year as part of the investigation.
New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen are jointly investigating alleged manipulation of the London interbank offered rate by lenders. RBS, UBS, Lloyds Banking Group Plc (LLOY) and Deutsche Bank are among the lenders that regulators in Europe, Asia and the U.S. are investigating. The U.S. is conducting a criminal investigation.
Confidence in Libor, a benchmark for financial products valued at $360 trillion worldwide, has been dented by Barclays’ admission that it submitted false London and euro interbank offered rates. Robert Diamond resigned as Barclays’ chief executive office after the bank was fined 290 million pounds ($456 million).
Derivatives traders requested the false submissions in the Libor and Euribor setting process, as they were “motivated by profit and sought to benefit Barclays’ trading positions,” the U.K. Financial Services Authority said.
The investigation by Schneiderman and Jepsen could broaden to include additional banks, said the person. Jennifer Givner, a spokeswoman for Schneiderman, and Jaclyn Falkowski, a spokeswoman for Jepsen, declined to comment on the subpoenas.
Separately, Florida Attorney General Pam Bondi’s office is “actively reviewing the Libor matter” and has subpoenaed 14 banks, spokeswoman Jenn Meale said. In addition to the seven institutions in the New York and Connecticut probe, Florida subpoenaed Bank of America Corp. (BAC:US), Societe Generale SA (GLE), Credit Suisse Group AG (CSGN), Credit Agricole SA (ACA), Royal Bank of Canada, Rabobank Groep and Lloyds Banking Group.
Sarah Binnie, a spokeswoman for Edinburgh-based RBS, said the bank continues to receive requests from various regulators investigating the setting of Libor and other interest rates. The lender is cooperating with the investigations and “keeping relevant regulators informed,” she said in an e-mail.
“It is not possible to estimate with any certainty what effect these investigations and any related developments may have on the group,” Binnie said.
Kathryn Hanes, a spokeswoman for Frankfurt-based Deutsche Bank, said the lender has received subpoenas and requests for information from some regulators and governmental entities in the U.S. in connection with setting interbank rates and is cooperating.
New York-based Citigroup said in a regulatory filing that subsidiaries “have received additional requests for information and documents from various U.S. and non-U.S. governmental agencies, including the offices of the New York and Connecticut attorneys general.”
UBS, based in Zurich, said in a regulatory filing that numerous agencies, including “various state attorneys general” are investigating whether there were improper attempts to manipulate Libor and other rates. A second person familiar with the matter said the bank received a subpoena from New York in February. Both declined to comment because the matter is private.
Nicole Sharp, a spokeswoman for London-based Lloyds Banking Group, said the company is assisting various regulators in their investigations. Royal Bank of Canada (RY) spokeswoman Katherine Gay said the bank is also cooperating with regulators.
“We did not find any evidence of collusion with other banks, and we have determined that our Libor submissions reflected our perception of our cost of funds,” Gay said in an e-mailed statement.
London-based HSBC said in a 2012 interim report that it is “the subject of regulatory demands for information” and is cooperating with the investigations.
Representatives of the other institutions couldn’t be reached for comment or declined to comment.
Massachusetts Attorney General Martha Coakley’s office said in July it was also conducting a Libor investigation and was working with other state agencies.
Libor is derived from a survey of banks conducted each day on behalf of the British Bankers’ Association in London. Lenders are asked how much it would cost them to borrow from one another for 15 different periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs. After a set number of quotes are excluded, those remaining are averaged and published for each currency by the BBA before noon.
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