AMERICAN authorities have issued subpoenas to several international banks as part of an investigation into “manipulation” of the London interbank offered rate (Libor) during the financial crisis.
The investigation came to light as part of a disclosure made by UBS in its annual report saying it had been subpoenaed by the US Securities and Exchange Commission (SEC), the US Commodity Futures Trading Commission (CFTC) and the Japanese Financial Services Authority (FSA) regarding “whether there were improper attempts by UBS, either acting on its own or together with others, to manipulate Libor rates at certain times”.
Sources familiar with the situation have confirmed to City A.M. that Barclays, Bank of America Merrill Lynch and Citigroup have also received subpoenas on the matter, and said that “a lot of banks are in the same situation”. All the banks named declined to comment, as did the SEC and CFTC.
Libor is calculated by Thomson Reuters for the British Bankers’ Association (BBA) and is used internationally as a benchmark to set prices on numerous derivatives and financial instruments.
Submitting an incorrect figure for Libor could be seen as “market manipulation” that might affect the market’s perceptions of risk and ease of credit between banks.
The BBA said in a statement: “Libor is fully transparent – all of the data inputted by the contributor banks is publicly available, as is our methodology.
It added: “And all decisions regarding the design and governance of the benchmark are taken in full consultation with market participants.”