Subpoenas have been handed down to seven banks in the New York and Connecticut LIBOR bank fraud investigation, according to a Bloomberg source. Among them, Barclays, UBS, Deutsche Bank, Citigroup, Royal Bank of Scotland, HSBC and, last but certainly not least, JPMorgan Chase.
At this point, we can ask the following question with nary a hint of cynicism: Which major scandals and shady business practices has JPMorgan not been involved in this year?
New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen recently undertook the joint investigation into alleged manipulation of the London interbank offered rate, or LIBOR. In short, Barclay’s and various other banks are believed to have collaborated via email to manipulate the LIBOR interest rate, defrauding its customers in the process. Essentially, the goal of certain bank representatives was to nudge an interest rate up or down a few points to bring in some nice profits.
(Read this article for more background on the LIBOR fraud.)
The implications of this scheming is that it defrauded customers as far as the interest rates they were owed or paid. Additionally, the LIBOR rate affects approximately $800 trillion in international securities, so if this blows up in the faces of banks, it will most negatively affect customer confidence in banks and be one of the biggest frauds in history.