(Bloomberg) -- The U.K. Serious Fraud Office closed its seven-year investigation into the manipulation of a key interest rate that led to the conviction of five London bankers in a scandal that became an emblem for banker greed following the financial crisis.
The end of the probe into the London interbank offered rate, a benchmark tied to trillions of dollars of mortgages and loans, means that prosecutors have dropped a related investigation of three senior current and former Barclays Plc executives.
Mark Dearlove, a top official in Japan who is retiring this year, and group treasurer Jon Stone were cleared as part of the decision, Stone’s lawyer, Neil O’May, said. That likely means that Miles Storey, former head of group balance sheet, who was part of the same probe, is no longer a suspect, though his and Dearlove’s lawyers didn’t respond to requests for comment.
Libor had been an constant -- but largely unknown -- presence in financial markets before it became synonymous with the financial crisis. Banks and traders manipulated the rate to hide financial problems or profit on trades.
The most famous Libor case involved Tom Hayes, a former trader at UBS Group AG and Citigroup Inc. who was ultimately sentenced to 11 years in prison. His trial in 2015 laid bare the tricks and tactics bankers would use to gain even the smallest advantage in complicated transactions.
A year later, three other bankers from Barclays, Jonathan Mathew, Jay Merchant and Alex Pabon, were convicted of similar rigging charges involving Libor. Another Barclays banker, Peter Johnson, had pleaded guilty in 2014 as part of the case.
The rate rigging investigations also became a symbol of a resurgent SFO, which arrested Hayes knowing that U.S. authorities were already planning to do the same.
The investigation also looked into traders at Deutsche Bank AG and Barclays rigging Euribor, a sister benchmark. Christian Bittar, a star trader who earned at $120 million bonus in 2008 alone, is serving a jail sentence after pleading guilty to fraud charges last year. Aspects of the Euribor investigation remain open, the SFO said in a statement.
The SFO’s overall results were mixed, with eight people being acquitted in various Libor-related cases.
Dearlove, Stone and Storey, who were more senior than those who went on trial, remained under investigation in connection with allegations that Barclays lowered its Libor submissions to make its balance sheet appear healthier during the 2008 financial crisis. It had been the last remaining leg of the Libor investigation.
“Jon Stone is obviously enormously relieved that this protracted investigation lasting over seven years into events over a decade ago has at last ended after the SFO has finally understood that there was never any evidence for his involvement in Libor manipulation and that he is indeed innocent of the allegations,“ O’May, a partner at Norton Rose Fulbright, said. “Questions must be asked over the lengthy and tardy investigation, which impacts both on the accused and the justice system.”
(Updates with details of senior bankers in second paragraph.)
To contact the reporter on this story: Anthony Aarons in London at firstname.lastname@example.org
To contact the editor responsible for this story: Anthony Aarons at email@example.com
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.