Libor Probe Said to Show Collusion

Traders may have been able to manipulate global interest rates.

Global regulators have exposed flaws in banks’ internal controls that may have allowed traders to manipulate interest rates around the world, two people with knowledge of the probe said.

Investigators also have received e-mail evidence of potential collusion between firms setting the London interbank offered rate, said the people, who declined to be identified because they weren’t authorized to speak publicly. Regulators are focusing on a lack of so-called Chinese walls between traders and employees making interest-rate submissions on behalf of their banks, the people said. In some cases, the two groups may have sat close to each other, one person said.

Barclays, UBS

HSBC, Barclays Plc and Royal Bank of Scotland Group Plc are among banks that have said they’ve received requests for information from global regulators in recent months. UBS AG said on Feb. 7 it had been given conditional immunity from the Swiss Competition Commission as part of an investigation into manipulation of the Yen Libor, Tibor, and Swiss franc Libor rates. The Zurich-based lender was last year granted similar immunity by the U.S. Department of Justice as part of its probes of Yen Libor and Euroyen Tibor rates.

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