New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates.
Some of those traders, including one who used to work at Barclays Plc in New York, still have senior positions on Wall Street trading desks.
Until now, most of the attention has involved traders at Barclays, which last month reached a $453 million settlement with U.S. and UK authorities for its role in the manipulation of rates. Now, it is becoming clear that traders from at least two other banks - UK-based Royal Bank of Scotland Group Plc and Switzerland's UBS AG - played a central role.
Among them, the three banks employed more than a dozen traders who sought to influence rates in either dollar, euro or yen rates. Some of the traders who are being probed have worked for several banks under scrutiny, raising the possibility that the rate fixing became more ingrained as traders changed jobs.
The documents reviewed by Reuters in analyzing the traders' involvement included court filings by Canadian regulators who have been investigating potential antitrust issues; settlement documents with Barclays filed by the U.S. Department of Justice and the U.S. Commodity Futures Trading Commission in Washington and by the Financial Services Authority in the U.K.; and a private employment lawsuit filed by a former RBS trader in Singapore's High Court.
The scandal, which began to come to light in 2008, has become a time bomb for regulators and a big focus for politicians on both sides of the Atlantic. At issue is the manipulation between at least 2005 and 2009 of rates that are used to determine the cost of trillions of dollars of borrowings, including everything from home loans to credit card rates.
One former Barclays employee under scrutiny, Reuters has learned, is Jay V. Merchant, according to people familiar with the situation. Merchant, who oversaw the U.S. dollar swaps trading desk at Barclays in New York, worked for the bank from March 2006 to October 2009, according to employment records maintained by the U.S. Financial Industry Regulatory Authority (FINRA).
Merchant currently holds a similar position at UBS, where he works out of the Swiss bank's offices in Stamford, Connecticut, according to FINRA. He did not return requests for comment.
People familiar with the investigation said authorities are looking at whether some individuals on Merchant's trading desk tried to influence the rate on Libor by communicating with other traders in London to get a higher return on certain swaps the desk was trading. His specific role is unclear.
The Department of Justice declined to comment.
Merchant's attorney, John Kenney of Hoguet Newman Regal & Kenney, did not respond to requests seeking comment.
A UBS spokeswoman said that the bank has "no reason to believe Mr. Merchant has engaged in any improper conduct at UBS." The spokeswoman, who noted that Merchant is on a two-week vacation, declined to comment on the broader investigation.
Barclays declined to comment. In a statement, an RBS spokeswoman said the bank is cooperating with the investigation.
SPREAD FROM BARCLAYS
Earlier this week, Reuters reported that federal prosecutors in Washington have begun reaching out to lawyers for some of the individuals under scrutiny as they get closer to bringing possible criminal charges.
The dollar and euro rate-rigging appears to have begun in earnest in early 2005 in the dollar market, according to the documents reviewed by Reuters. By August of that year, Barclays traders were reaching out to traders at other big global banks to manipulate their rates to make them favorable to Barclays' trading positions.
Soon, the trading had crossed to the euro rate markets, according to the settlement documents filed in the Barclays investigation. And by 2007, traders at RBS and UBS were seeking to influence the yen rate market, according to documents filed in 2011 in Singapore's High Court and in Canada's Ontario Superior Court.
Traders at Barclays are believed to have participated in manipulating the rate for the dollar and the rate for the euro known as Euribor, according to documents filed in the Barclays settlement last month.
RBS and UBS traders are a focus of the global investigation because of their alleged involvement in seeking to influence yen-denominated rates.
Two RBS traders in London, Brent Davies and Will Hall, are alleged to have agreed to help a trader at UBS, Thomas Hayes, to manipulate yen Libor, according to court documents filed by the Canadian Competition Bureau.
UBS is cooperating with Canadian and U.S. authorities, according to people familiar with the situation.
Hayes worked at UBS from 2006 to 2009. He later moved to Citigroup where he remained until 2010, after which he left the bank. Hayes, Davies and Hall could not be reached for comment.
The documents reveal that Hayes also contacted traders at other banks in London to get them to manipulate yen rates. They include Peter O'Leary at HSBC Holdings Plc, Guillaume Adolph at Deutsche, and Paul Glands at JPMorgan. A second UBS employee sought to get a Citigroup trader, who formerly had worked at UBS, to influence rates.
None of these traders could be reached for comment.
In addition, a former trader at RBS, Tan Chi Min, said in a wrongful termination lawsuit filed in the Singapore High Court in 2011 that he was forced out for "improperly seeking to influence" the setting of Libor. Tan, who ran a trading desk at RBS, said in the suit that improper rate-rigging was known by some at the bank and condoned.
Tan denied trying to manipulate Libor, and alleged in the 2011 court filing, and one in March this year, that about a half dozen other RBS traders openly tried to request specific rates.
Tan's attorney, N. Sreenivasan, declined to comment because the court case is ongoing.
Beyond traders at the three European banks, authorities are still probing the role of others.
For example, traders at JPMorgan Chase & Co also interacted with some of the traders under scrutiny who worked for Barclays and RBS, according to a person familiar with the situation and court documents filed in Singapore.
Similarly, Deutsche Bank AG also had several employees whose trading is under scrutiny by authorities, according to people familiar with the situation and court documents filed in Canada.
JPMorgan and Deutsche Bank declined to comment.
(Reporting by Carrick Mollenkamp and Emily Flitter in New York; Additional reporting by Matthew Goldstein and Jennifer Ablan in New York, Rachel Armstrong in Singapore, Anjuli Davies in London and Katharina Bart in Zurich; Editing by Martin Howell and Nick Macfie)
(This story has been refiled to edit the fourth paragraph)