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UBS' admission that it and possibly other institutions are being investigated for potential manipulation of the interest rate benchmark could ripple through the financial system.
March 15 -
With the U.S. economy showing signs of a fledgling recovery, some now question whether it makes sense to enmesh the loan rates of U.S. homeowners and small businesses with the ill health of European financial institutions and governments.
May 25 -
If manipulation of the interest rate benchmark inadvertently benefited borrowers, someone else had to pay the price.
December 15
Lloyds Banking Group Plc (LLOY), the U.K.'s second-biggest government-backed lender, suspended at least two derivatives traders in a probe of potential interest-rate manipulation, two people briefed on the matter said.
Foreign-exchange derivatives trader Alexandre Dube and interest-rate derivatives trader John Argent, both based in London, were sent home about two months ago, said the people, who declined to be identified because they weren't authorized to discuss the matter.
Lloyds joins Royal Bank of Scotland Group Plc, Citigroup Inc., UBS AG, Deutsche Bank AG and ICAP Plc in dismissing, putting on leave or suspending traders as part of the investigations into interest-rate manipulation.
Both are listed as active on the U.K. Financial Services Authority's register of people approved to work in the industry. Attempts to reach them through the Internet, work phone numbers and directory assistance were unsuccessful. Dube didn't respond to calls to his mobile phone, which was switched off.
Lloyds joins Royal Bank of Scotland Group Plc, Citigroup Inc. (C), UBS AG, Deutsche Bank AG (DBK) and ICAP Plc in suspending, dismissing or putting on leave traders as part of the investigations into interest-rate manipulation. Regulators have requested information from banks and interdealer brokers as part of a global investigation into whether there were attempts to manipulate the London, Tokyo and euro interbank offered rates, known as Libor, Tibor and Euribor.
The Securities and Exchange Commission, Commodity Futures Trading Commission, Department of Justice, Japan's Financial Supervisory Agency and the U.K. Financial Services Authority are all investigating whether traders colluded in the setting of money-market interest rates. European Union antitrust regulators and the Swiss Competition Commission are also investigating.
Lawsuits Filed
A spokesman for Lloyds said the bank doesn't comment on individual employees.
"As with many others in the sector, the group is assisting various regulators in their ongoing investigations into the setting of Libor," London-based Lloyds said in a statement today. "Until these investigations are completed, it would be inappropriate for us to comment any further."
Lloyds said in March it had been named in private lawsuits in the U.S. relating to how various banks set Libor and was also cooperating with government agencies in their investigations.
Libor, a benchmark for about $360 trillion of financial products worldwide, is derived from a survey of banks conducted daily on behalf of the British Bankers' Association in London. The 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 predetermined number of quotes are excluded, those remaining are averaged and published for each currency by the BBA before noon.
Argent was hired by Lloyds in 2001, while Dube joined the firm from National Bank of Canada in 2006, according to the FSA register.
A call to Argent's work phone was answered by a colleague who didn't identify himself who said the trader had been off work for several weeks for personal reasons. The colleague said he couldn't specify when Argent would return.
