* More than a dozen traders have hired lawyers
* Federal grand jury in DC continues to operate
* Investigation is a top priority for CFTC
By Emily Flitter and Sarah N. Lynch
NEW YORK, July 11 More than a dozen current and
former employees of several large banks under investigation for
allegedly trying to manipulate benchmark interest rates have
hired defense lawyers over the past year, according to people
familiar with the matter.
The individuals, some whom were employed in either New York
or London by Barclays, UBS and Citigroup, have retained lawyers
as a federal grand jury in Washington, D.C. gathers evidence for
potential criminal charges, these people said.
In the case of Barclays and UBS, multiple law firms are
representing individuals who have worked at those banks, sources
The U.S Commodity Futures Trading Commission is treating the
Libor investigation as one of its top priorities. One person
said CFTC Chairman Gary Gensler has been getting regular
briefings every few weeks on the status of the probe into the
possible manipulating of the London Interbank Offered Rate - or
LIBOR - which underpins some $550 trillion in loans, securities
An indication of just how important the investigation is for
the CFTC is that the lead enforcement attorney Anne Termine is
now working on Libor full-time, said individuals close to the
CFTC. Her team also includes experts specifically brought in by
the CFTC to help on the LIBOR case, including trial attorneys
and people to help manage the database of emails turned over by
The sources discussing the investigation did not want to be
identified because the probe, which began about four years ago,
is continuing and no individuals have been charged with any
The Libor investigation became an international banking
scandal in June when Barclays agreed to pay $453 million to
settle charges by U.S. and British authorities that some of its
employees had attempted to manipulate the benchmark Libor
Barclays admitted it submitted false information to the
British Bankers Association as part of the complex process of
setting Libor, in order to influence the pricing of derivatives
and also rebut speculation about the weakness of the bank's
balance sheet during the financial crisis.
CFTC and federal prosecutors in Washington, D.C. have led
the Libor investigation in the U.S. As part of its settlement
with regulators, Barclays entered into a nonprosecution
agreement with federal prosecutors, which insulates the bank
from criminal charges but not necessarily its employees.
Officials with the Department of Justice and the CFTC
declined to comment.
Representatives for Barclays, which has hired Sullivan &
Cromwell, declined to comment, as did UBS. A Citi spokesman said
it is not uncommon for the bank to retain outside counsel to
represent individual employees "who are witnesses in relation to
complex matters," adding it in no way suggests any misconduct by
Barclays' settlement led to the swift resignation of the
bank's chief executive Robert Diamond Jr. and sparked a
political fire storm in England. Within days of resigning,
Diamond was called before the British Parliament to testify on
the bank's role in the interest rate fixing scandal.
Lawmakers on Capitol Hill are gearing up for potential
hearings in Washington, D.C. The chairman of a House Financial
Services subcommittee has given the New York Fed until Friday to
turnover transcripts of any communications it had with Barclays
regarding the setting of Libor rates from August 2007 to
The CFTC settlement with Barclays covers attempts to
manipulate Libor from as far back as 2005 and ending in 2008.
Meanwhile, other people familiar with the inquiry, including
private defense lawyers, cautioned that it is too soon to say
whether other banks will be penalized in the investigation and
if individual traders will face either civil or criminal
They said U.S. investigators are looking for evidence that
traders at the banks under scrutiny tried to manipulate Libor in
order to increase their own profits, not to make the bank as a
whole look healthier.
These sources said many of the individuals who have retained
lawyers have signed waivers with the Justice Department
extending the statute of limitations for bringing charges until
the end of year.
It's not uncommon in long-running criminal investigations
for individuals to agree to so-called "tolling agreements" to
avoid having federal prosecutors make a rush to judgment in
bringing an indictment.
As a global benchmark interest rate, Libor is used to set
prices on a wide range of financial instruments from home loans
to municipal bonds and derivatives contracts.
Panels of banks report their borrowing costs each weekday to
the BBA, which compiles them to publish benchmark borrowing
rates for a range of currencies, including U.S. dollars, euros,
UK pounds and yen.
Those benchmark rates are then used by lenders around the
world to determine interest rates for loans and other financial
The dollar Libor panel consists of 16 banks, which have all
been probed by regulators for their roles in a scheme to
artificially fix the Libor rate sometime between 2005 and 2008.
Outside of Barclays, the other bank that has drawn the most
attention in the rate probe is UBS.
Last year, UBS agreed to cooperate with the Justice
Department in an antitrust investigation looking into whether
the banks on the panel colluded to manipulate the Libor setting.
In return, the DOJ granted UBS antitrust immunity. But experts
say the immunity does not extend to other potential avenues of
Several UBS employees, located not just in London but in the
U.S., Asia and Europe, have retained lawyers, sources said. In
the U.S., UBS headquarters are in Stamford, Conn.