As part of the LIBOR rate-rigging criminal investigation a UK fraud agency and London police detained three men - the first arrests in the global inquiry that unnerved the banking industry last summer, though the scandal reaches back years.
In a brief statement the UK's Serious Fraud Office (SFO) announced the arrest of three unnamed men:
"Today the Serious Fraud Office, with the assistance of the City of London Police, executed search warrants at three residential premises in Surrey (1) and Essex (2). Three men, aged 33, 41 and 47, have been arrested and taken to a London police station for interview in connection with the investigation into the manipulation of LIBOR. The men are all British nationals currently living in the United Kingdom."
As the BBC points out in this great infographic, LIBOR, aka the London interbank offered rate, is created when a group of London banks "submit rates for 10 currencies and 15 lengths of loan ranging from overnight to 12 months." But banks inflated or deflated their submissions so they (or others) could profit from ongoing trades, and now regulators from Europe, Japan, the US and Canada are investigating how the interbank lending rate was manipulated.
The New York Times quoted a senior trader in New York who sent and email to a LIBOR submitter:
"Hi Guys, We got a big position in 3m libor for the next 3 days. Can we please keep the lib or fixing at 5.39 for the next few days. It would really help. We do not want it to fix any higher than that. Tks a lot."
The LIBOR rate affects millions of people throughout the world. As GlobalPost's Editor and global business columnist Thomas Mucha wrote in July:
"It affects students looking for loans, people trying to buy homes, small businesses owners trying to raise capital to fund new ideas and create jobs, and just about everything else that underpins our shared global financial system."
In June, Barclays bank was fined $450 million for trying to manipulate the rate. Its chief executive, Robert E. Diamond Jr., resigned. Reuters reports financial settlements from Switzerland's UBS and Britain's RBS banks are expected soon.
Other banks are under investigation and civil and criminal cases are being perused by regulators, according to The New York Times.