Attorney generals from two states to ‘follow evidence wherever it leads’, as US justice department steps up its own investigation
New York and Connecticut attorneys general have joined forces to investigate alleged manipulation of the Libor interest rates.
The scandal is already being investigated by the US justice department and financial regulators on both sides of the Atlantic. But the involvement of New York state is likely to ramp up the investigation.
New York state’s Martin Act gives its attorney general the most wide-ranging investigative powers of any state. Eliot Spitzer used the act to force a massive settlement out of Wall Street following the analysts scandal of the early 2000s.
New York attorney general Eric Schneiderman and Connecticut attorney general George Jepsen are working together in the investigation. A spokeswoman for the Connecticut attorney general confirmed that two state lawyers had been working on the Libor issue “over the last several months” looking at “alleged anti-competitive conduct related to potential rigging and manipulation of benchmark interest rates.”
“The attorney generals will follow the evidence wherever it leads and with the goal of providing restitution to state agencies, municipalities, school districts and not-for-profit entities nationwide that may have been harmed by any illegal conduct,” she said.
Barclays, JP Morgan, Bank of America and UBS are among the banks being investigated over allegations that they colluded to fix rates between 2005 and 2007. Last month, Barclays paid a record $451m to settle charges it submitted false numbers for the benchmark rates, which are used as the basis for $500tn in securities including complex derivatives, car loans and 45% of US mortgages.
New York and Connecticut are investigating whether they lost money in their own investments as a result of the alleged manipulation. The city of Baltimore has already filed a lawsuit against many of the banks allegedly involved, claiming that the alleged manipulation cost them money.
The move comes as the US justice department appears to be stepping up its own investigation into the scandal. Federal investigators are building criminal cases against several financial institutions, the New York Times reported over the weekend.
Barclays traders involved in allegedly manipulating Libor rates could face possible US charges before the Labor Day holiday in September, according to Bloomberg, which cited a person familiar with the justice department investigation.
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