PROSECUTORS in the United States and Europe are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to sources familiar with a sweeping investigation into the rigging scandal.

    Federal prosecutors in Washington, D.C. have recently contacted lawyers representing some of the suspects to notify them that criminal charges and arrests could be imminent, said the sources.

    Defense lawyers, some of whom represent suspects, said prosecutors have indicated they plan to begin making arrests and filing criminal charges in the next few weeks. In long-running financial investigations, it is not uncommon for prosecutors to contact defense lawyers before filing charges to offer suspects a chance to cooperate or take a plea, the lawyers said.

    The prospect of charges and arrests means prosecutors are getting a fuller picture of how traders at major banks allegedly sought to influence the London Interbank Offered Rate, or Libor, and other global rates that underpin hundreds of trillions of dollars in assets. The criminal charges would come alongside efforts by regulators to five major banks, and could show that the alleged activity was not rampant at the lenders.

    “The individual criminal charges have no impact on the regulatory moves against the banks,” said a European source familiar with the matter. “But banks are hoping that at least regulators will see that the scandal was mainly due to individual misbehavior of a gang of traders.”

    In Europe, financial regulators are focusing on a ring of traders from several European banks who allegedly sought to rig benchmark interest rates such as Libor, said the European source familiar with the investigation in Europe.

    The source, who did not want to be identified because the investigation is ongoing, said regulators are checking emails among a group of traders and believe they are close to piecing together a picture of how the suspects allegedly conspired to make money by manipulating rates. The rates are set daily based on an average of estimates supplied by a panel of banks.

    “More than a handful of traders at different banks are involved,” said the source familiar with the investigation by European regulators.

    There are also probes in Europe concerning Euribor, the Euro Interbank Offered Rate. (SD-Agencies)