Top executives at as many as 12 banks are under new scrutiny regulators in the U.S. and the U.K. in connection with the Libor rigging scandal which embroiled many of the two countries’ top banks. That’s according to a report by David Enrich and Atsuko Fukase of The Wall Street Journal.
Deeper probe triggered by new information from Citigroup
Sources said Citigroup Inc (NYSE:C) is one of the banks facing renewed scrutiny because of new information provided by a former employee who’s now charged in the scandal. One of the letters he wrote which suggests top bank executives were involved has been obtained by the U.K.’s Serious Fraud Office. The letter was written by Tom Hayes from the bank’s Tokyo operations to the bank’s human resources department. He sent it in September 2010 just days after Citigroup fired him for attempting to manipulate benchmarks.
“My actions were entirely consistent with those of others at senior levels,” he wrote. “The senior management at [Citigroup Japan] were aware of my actions.”
Did senior executives know?
Regulators are now trying to determine if top executives at Citigroup Inc (NYSE:C) and the other banks knew that their employees were manipulating Libor, or the London interbank offered rate. The manipulations were aimed at benefiting the banks’ trading positions. Several banks have been fined in connection with the scandal, but this time the investigation is focusing on the banks’ top executives.
Sources told The Wall Street Journal that Hayes has been cooperating with the Serious Fraud Office’s investigation for months. He faces charges of attempting to manipulate benchmark rates, both in the U.S. and in the U.K. Before working for Citigroup Inc (NYSE:C), he worked at UBS AG (NYSE:UBS) (VTX:UBSN).
Top Citigroup Japan executives implicated
A number of former employees at Citigroup told officials that Hayes and his boss went to two senior executives at the bank to get help with their Libor fixing scheme and that sometimes they did help them. The employees said Hayes needed other employees at the bank to fix interest rates reported by the bank to organizations which calculated Libor.
They implicated former Citigroup Japan investment bank head Brian Mccappin in the scandal, saying that he made some of the rate fixing requests for Hayes. Former employees at the bank also implicated Chris Cecere, who was Hayes’ boss, and Andrew Morton, who headed up the London-based interest rates trading business for Citigroup.