The Serious Fraud Office (SFO) has been investigating the ‘LIBOR’ scandal. This is an investigation into the alleged manipulation of the LIBOR bank lending rate.
Arrests were made in December 2012 although no individual has yet been charged. Individual arrests and investigations are quite apart from any regulatory action that may be taken. There are also rumours of further arrests related to this being imminent.
It has been suggested that US Prosecutors and their European counterparts have identified a ring of traders relating to four banks and that traders will be arrested in the very near future. This will inevitably put the SFO under a degree of pressure to conclude their investigation or at the very least share common resources to conduct a joint investigation.
One very common question people are asking outside the financial circles is very simply ‘What is LIBOR and why is it important?’ LIBOR is the ‘London Inter Bank Offered Rate’. This is an interest rate figure for other financial organisations to set interest rates often worldwide. It is created by measuring from what banks expect to pay to borrow from each other for different time periods. It is the interest rate that the most credit worthy banks around the world charges each other for loans ranging from a period of 24 hours to as much as 5 years. It is announced each morning at 11am London time.
The job of the SFO is made more difficult by the evidential difficulties they are bound to face. They have to prove that LIBOR was changed as a result of the trader’s actions. To get absolute proof of this is going to be difficult. Email communications may well become extremely important in any such paper trail.
It may well be that individuals who are entirely innocent of any manipulation could be implicated and involved in the investigation. It is important for any individual to seek specialist legal advice immediately should any approach be made to them during this investigation either from the SFO or international enforcement.
By Rachel Adamson, fraud specialist and associate solicitor
- Here at Stephensons we have a team of experienced advisors in financial crime and we have the ability to put a team into place immediately to deal with in depth, complex investigations whether the investigation starts here or overseas.