Competition Bureau’s affidavits reveal Libor manipulation system and extent of Canada’s probe

The Wall Street Journal has reviewed affidavits that the Canadian Competition Bureau submitted for its request to compel production of information from banks under investigation for manipulating interest rates. In the affidavits, the competition watchdog has stated that a bank had successfully manipulated yen Libor between 2007 and June 2010.

Furthermore, in its filing, the Competition Bureau describes the process by which Libor was set by banks: six banks on the yen Libor panel “entered into agreements to submit artificially high or artifically low” quotes, with the aim of increasing their trading positions. These banks include Citigroup, Deutsche Bank, HSBC, J.P. Morgan Chase, Royal Bank of Scotland, and UBS.

The Competition Bureau is also investigating possible price-fixing of certain derivative financial products linked to Libor, and whether traders at the banks also conspired with interdealer broker firms ICAP, PLC, and RP Martin Holdings.

Source: Wall Street Journal (subscription required)

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