Seven banks subpoenaed. Let the mass arrests begin

JPMorgan Chase & Co. (JPM) 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 five of the banks, 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) 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 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’s admission that it submitted false London and euro interbank offered rates. Robert Diamond resigned as Barclays’ chief executive after the bank was fined 290 million pounds ($454 million).

False Submissions

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.

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 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.

Information Requests

Kathryn Hanes, a spokeswoman for 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 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.

New York-based JPMorgan dropped almost 1 percent on the news. JPMorgan closed at $37.07 in New York Stock Exchange composite trading. London-based Barclays’s American depositary receipts fell 6 cents to $11.47. One receipt equals four shares. Zurich-based UBS fell 3 cents to $10.71 in New York. Frankfurt- based Deutsche Bank rose 9 cents to $30.78.

Read More Here