London, United Kingdom (4E) – As part of the international investigation into manipulation of the London interbank offered rate, a former Citigroup Inc. trader and two others were arrested in the UK, according to sources familiar with the matter.
In a statement released on Tuesday, the Serious Fraud Office said that it had three men arrested and described all suspects as British nationals currently living in the UK.
Authorities worldwide are investigating allegations that several banks had deliberately modified submissions used for benchmarks including Libor to make money from interest-rate derivatives or artificially improve the lenders’ balance sheets.
Swiss lender UBS may face a fine this week that could go beyond the record fine paid in June by Barclays Plc, the U.K.’s second-biggest bank, that reached $466.6mn to settle allegations that it manipulated Libor.
Tom Hayes, a former employee of UBS and Citigroup, was one of the three people arrested, according to sources familiar with the investigation. Hayes has been previously suspected of rate manipulation and has been dismissed.
Libor, a worldwide benchmark for various financial products worth more than $300tn, comes from a survey of banks made daily on behalf of the London-based British Bankers’ Association. Its rates help determine the cost of borrowing from student loans to mortgages.