The
United States Justice Department could initiate criminal proceedings against
financial institutions and individuals at the centre of Libor manipulation
scandal. Several authorities within and outside US, including private investors’
lawsuits, are currently investigating the role of banks, including Barclays and
its employees into the scandal.
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The
focus of the investigations is how the banks ‘set’ the London interbank offered
rate (Libor), the benchmark rate which is used by banks when they give loans to
each other. The Libor eventually determines the ‘cost’ or the interest rate of
other loans and financial products such as mortgages and credit cards.
According
to New York Times, the US can officially charge one or more banks by the end of
this year. It is highly likely that Barclays and some of its traders will
receive the first blow. Analysts are expecting the Switzerland based UBS to
become the focus of investigations in the near future. Other banks that are
also embroiled in the scandal include Citigroup, JPMorgan & Chase and Deutsche
Bank.
This
could deliver a significant blow to the global banking sector as criminal and
civil lawsuits could lead to penalties extending to several billion dollars. A
government official who was involved in the case was quoted as saying, “It’s
hard to imagine a bigger case than Libor,”
Since
the investigations are currently underway therefore no official word has come
out yet. The New York Times has reported unnamed government official as the
source of information.
Barclays
was slapped with a $450 million fine by US and UK authorities over rate
rigging, but its employees can still be charged for criminal wrongdoings. In
the meanwhile, other financial institutions that are currently being
investigated are trying to reach a settlement with US authorities in order to
avoid criminal proceedings.
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Relevant
Links
U.S.
Is Building Criminal Cases in Rate-Fixing [New York Times]
US
builds case against bankers over Libor [Al-Jazeera]
Barclays
may face charges in US over Libor – report [The Guardian]