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On Tuesday, Britain’s Serious Fraud Office, which is responsible for investigating and prosecuting serious and complex fraud and corruption, arrested three people because of their connection with the manipulation of the London Interbank Offered Rate.
“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,” reads the entire statement issued by the SFO.
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The SFO launched an investigation in July, after British and American authorities fined Barclays PLC (NYSE:BCS) over $400 million for falsifying reports on borrowing costs related to the LIBOR. Barclays was the first to pay up for bad behavior related to the scandal, but probably won’t be the last. As many as 16 banks are under investigation by U.S. authorities alone.
The LIBOR underpins as much as $550 trillion in loans and financial contracts. Some observers are calling the LIBOR scandal the largest case of financial fraud ever, and some think that the system can be fixed, but the scope of the issue is largely a mystery. These arrests obviously represent a step forward for regulators but there is no solution in the near future.
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