Here’s Why Subpoenas are Raining Down on Banks
Both Schneidermann and Connecticut Attorney General George Jepsen have been examining claims that banks rigged the London interbank offered rate, or Libor, a worldwide benchmark for borrowing. The joint investigation could result in civil enforcement action under antitrust and fraud regulations.
Citing anonymous sources, The Wall Street Journal and Bloomberg Businessweek reported that a total of 16 subpoenas have been served since August. Societe Generale (SCGLY.PK), the Royal Bank of Canada (NYSE:RY), and Bank of America (NYSE:BAC) are among the most recently reported banks to receive the summons. The same source said in August that seven banks, including JPMorgan Chase (NYSE:JPM) and Barclays (NYSE:RY), were also subpoenaed regarding the investigation.
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“A primary focus of the multistate investigation is to identify whether state and municipal issuers with financial instruments pegged to Libor and other benchmark interest rates have been harmed by the alleged conduct and, if so, to seek recovery of those taxpayer funds,” Julie Falkowski, a spokesperson for Connecticut attorney general, said in a statement to Bloomberg.
Other banks named in the investigation include Credit Suisse (NYSE:CS), Bank of Tokyo Mitsubishi, Norinchukin Bank, Rabobank, Lloyd’s (NYSE:LYG), and West LB, a German lender that has ceased operations.
Representatives of those banks could not be reached for comment by Bloomberg, or declined to comment on the subpoenas.
The Dow Jones Industrial Average slid lower Friday morning, led by a decrease in the shares of Bank of America. Despite positive economic reports, the S&P 500 and the Nasdaq dropped as well. According to CNBC, “Most key S&P sectors were in negative territory, led by financials and consumer staples.”
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