World Bulletin / News Desk
New York Attorney General Eric Schneiderman has launched a probe into possible manipulation of the Libor benchmark international lending rates by global banks, his spokesman said on Sunday.
Schneiderman, along with Connecticut's Attorney General George Jepsen started the investigation six months ago into the possible rigging of Libor, the London interbank offered rate, New York Attorney General spokesman James Freedland told Reuters.
Libor is compiled from estimates by big banks of how much they believe they have to pay to borrow from each other. It is used for $550 trillion of interest rate derivatives contracts and influences rates on many lending transactions, including mortgages, student loans and credit cards.
"Working together, the New York and Connecticut attorneys general have been looking into these issues for over six months, and will continue to follow the facts wherever they lead," Freedland said.
Jepsen's spokeswoman did not immediately respond to a call and an email for comment.
Barclays Plc, the bank at the center of the Libor scandal, was fined a record $450 million last month by U.S. and British authorities for manipulating the rate, but the deal does not shield Barclays employees from criminal prosecution.
The U.S. Justice Department is also building criminal cases against several financial institutions and their employees related to the manipulation of interest rates, The New York Times reported on Saturday.
The Times said cities, states and municipalities in the United States were trying to determine whether they suffered loses due to rate manipulation and some had filed suit.
Given the broad scope of the Libor case and the number of institutions thought to be involved, the investigations could provide authorities with a "signature moment" to hold big banks accountable for misdeeds during the financial crisis, which hit global markets from late 2007, the newspaper said.
The investigation is unusually complex, could continue for years and end in settlements rather than indictments, the Times said, citing officials close to the case.
Separately, Bloomberg reported that Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 could face possible U.S. charges before the Labor Day holiday in September. The agency had cited a person familiar with the Justice Department investigation.
A spokeswoman for the Justice Department declined to comment to Bloomberg. Both Justice department and Barclays could not immediately be reached for comment by Reuters outside regular U.S. and UK business hours.
States jump in
The New York Attorney General has powerful tools in his legal arsenal including the state securities fraud statute known as the Martin Act. That law allows authorities to establish financial fraud without proving intent to defraud. The AG can bring both civil and criminal cases.
States can also make the case that rate rigging harmed state finances by lowering returns on financial contracts with banks, such as interest rate swaps which help small governments manage the cost of their debt. If Libor is artificially lowered, the state receives smaller payments.
Barclays will pull out of the rate-setting panel for interbank lending in the United Arab Emirates because of its involvement in the Libor scandal in that country, industry sources told Reuters on Sunday.
Ecuador, Egypt, Pakistan, Venezuela, Belize, Cuba, Cyprus, Greece, Jamaica and Ukraine are all on the verge of a default, according to Moody's ratings.
A World Trade Organisation pact to ease worldwide customs rules collapsed late on Thursday over India's demands for concessions on agricultural stockpiling.
India's new nationalist government has insisted that a permanent agreement on its subsidised food stockpiling must be in place at the same time as the trade facilitation deal
Chemicals firm LyondellBasell has emerged as the mystery American buyer of Kurdish crude oil this year, but said it will not be buying any more
Some EU member states remain nervous about the impact on their own fragile economies. The sanctions deal was agreed only after initial proposals were narrowed.
Bankers in Singapore say Russians looking for a new Cyprus have come to the wrong place.
The default could get much messier and take longer to clear up if creditors force an "acceleration" for early payment on their bonds.
The ban came a day after the European Union and United States imposed their first sanctions aimed at hitting broad sectors of the Russian economy
Russia called new U.S. sanctions "destructive and short-sighted"
While the default will obviously hurt the economy, it will not be as severe as in 2001, economists say
The Czechs, who supported the action, have been against sweeping sanctions, worried about trade relations with Russia
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The United Kalavrvta tanker, carrying some 1 million barrels of crude worth about $100 million, arrived off the coast of Texas on Saturday but has yet to unload its disputed cargo.
The uncertainty comes at a bad time for the 18 countries in the euro zone, whose economy is already in the doldrums.
"Kalashnikov regrets that consumers are faced with such a problem," said spokeswoman Yekaterina Boni.
Cairo and Khartoum had earlier accepted a proposal by Addis Ababa to hold the talks in Sudan in the third week of August.