7 banks subpoenaed over rate-fixing

ALBANY—The attorneys general of New York and Connecticut have issued subpoenas to seven banks over the possible manipulation of a global interest rate, a person with knowledge of the matter told The Associated Press yesterday. Subpoenas were issued, mostly last month and this month, to Barclays, Citigroup, Deutsche Bank, JPMorgan Chase, HSBC, Royal Bank of Scotland and UBS, the person said.

American and British regulators have already fined Barclays, based in Britain, US$453 million for submitting false information between 2005 and 2009 to keep the interest rate, known as LIBOR, low. LIBOR, short for London interbank offered rate, is used to set the interest rates on trillions of dollars in contracts around the world, including mortgages and credit cards.

It is a self-policing system and relies on information that global banks submit to a British banking authority. The New York and Connecticut attorneys general issued the subpoenas because LIBOR is also used to determine the rates for the bonds issued by city and county governments, the person with knowledge of the matter told AP.

Barclays has admitted that it submitted figures that were lower than accurate for its interbank borrowing, including during the financial crisis in the fall of 2008. Those reports made it appear that Barclays was healthier than it was. UBS filed a report with regulators July 31, saying that agencies including state attorneys general were examining whether it and other banks had tried to manipulate the rate.

AP