Traders being investigated by U.K. regulators for the suspectedrigging of global interest rates are unlikely to face criminalcharges while their firms may suffer record fines, people withknowledge of the probe said.

Britain's Financial Services Authority is scrutinizing evidenceof attempted market abuse as well as failures in banks' systems andcontrols, which carry civil penalties, said the people, whodeclined to be identified because the inquiry is private. To filecriminal charges in England, the regulator would need to showtraders successfully manipulated the rate.

The FSA is among regulators looking into whether banks tried tomanipulate the London interbank offered rate, the benchmark ratefor $360 trillion of securities, to hide their true cost ofborrowing, and whether traders colluded to rig the benchmark toprofit from interest-rate derivatives.

Royal Bank of Scotland Group Plc, Citigroup Inc., UBS AG, ICAPPlc, Lloyds Banking Group Plc and Deutsche Bank AG are among firmsthat are being probed by regulators worldwide. Spokesmen for UBS,RBS, ICAP, Deutsche Bank and Lloyds declined to comment, whilethose for Citigroup didn't immediately return calls. Joseph Eyre,an FSA spokesman, declined to comment.

The European Union, Canadian and U.S. antitrust regulators aswell as the Swiss Competition Commission are probing whether firmsacted anti-competitively. The U.S. Department of Justice is runninga criminal investigation, according to court documents. AlisaFinelli, a Justice Department spokeswoman, declined to comment onthe status of its probe.

The FSA expects to levy record fines on some of the 12 banksunder investigation by the year-end, one of the people said. TheFSA initially expected it wouldn't impose penalties beforeChristmas because of the case's complexity. Firms have beencooperating to end the probe early, the people said.

The FSA may seek to levy fines as large as those issued by itsU.S. counterparts, one of the people said. The FSA's fines havehistorically been exceeded by those levied by U.S. regulators. TheFSA's biggest fine to date is the 33 million-pound ($51 million)penalty it imposed on a unit of JPMorgan Chase & Co. in 2010over a failure to segregate client money.

The U.K. regulator hasn't granted immunity to any firms orindividual traders, and those who cooperate would be entitled toreceive the regulator's standard 30 percent discount on fines forsettling early, one of the people said.

Regulators are interviewing traders at the FSA's office inLondon's Canary Wharf district and further meetings are planned assoon as this month, four people said. Investigators from the U.S.Securities and Exchange Commission and Commodities Futures TradingCommission have been present at some interviews, four people said.John Nester of the SEC and Steve Adamske, a CFTC spokesman,declined to comment.

Lifetime Ban

One trader interviewed was warned to expect a fine or lifetimeban from working in the industry if found guilty of attempting toinfluence the rate, according to his lawyer who declined to beidentified. Three other lawyers involved in the case said they areconcerned U.S. authorities may seek to extradite British traders ifthey file criminal charges, and the FSA hasn't raised the issuewith them. They all declined to be identified because the talks areprivate.

Libor is derived from a survey of banks conducted each day onbehalf of the British Bankers' Association in London. Lenders areasked how much it would cost them to borrow from each other for 15different periods, from overnight to one year, in currenciesincluding dollars, euros, yen and Swiss francs. After a set numberof quotes are excluded, those remaining are averaged and publishedfor each currency by the BBA before noon.

Three-month dollar Libor was unchanged at 0.468 percent today,according to the BBA. The comparable rate in euros also held steadyat 0.577 percent.

Employees responsible for Libor submissions have said ininterviews with Bloomberg they regularly discussed where to set themeasure with traders sitting near them, interdealer brokers andcounterparts at rival banks. The talks became common practice aftermoney markets froze in 2007, they said, making it difficult forindividual bankers to gauge the cost of borrowing from otherlenders.

Regulators are focusing on the lack of so-called Chinese wallsbetween traders and employees making interest-rate submissions onbehalf of their banks, and whether the banks' proprietary tradingdesks exploited the information they had about the direction ofLibor to trade interest-rate derivatives.

The firms are seeking to reach a joint settlement withregulators in the U.K. and U.S. under which they would pay fines toend the investigation, one of the people said. That may bedifficult to reach because the regulator requires banks in the U.K.to admit guilt in a settlement, something that could expose them toclass-action lawsuits in the U.S., the person said. The settlementwouldn't include antitrust authorities.

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