Libor Complaint Prompts Paris Prosecutors to Open Inquiry

Paris prosecutors opened a preliminary inquiry over manipulation of the London interbank offered rates, or Libor, after a complaint by a Societe Generale SA (GLE) shareholder.

The July complaint, which didn’t name a target, claims that lenders engaged in market manipulation related to Libor, among other allegations, Frederik Karel Canoy, the investor’s lawyer, said today.

“All the banks participated,” Canoy, who traditionally represents small shareholders, said by phone. “They manipulated the rates higher and lower.” The Paris inquiry was opened in September and is in the hands of the financial unit, he said.

Regulators across the globe are investigating claims banks altered submissions that were used to set Libor in an effort to benefit traders, or to appear financially healthier than they were. Barclays Plc (BARC) paid a 290 million-pound ($466 million) fine in June to settle with British and U.S. regulators over rate rigging. Sixteen banks have been subpoenaed in investigations by U.S. states attorneys.

Spokeswomen for the prosecutors’ office and Societe Generale didn’t immediately return calls seeking comment.

The investigation was reported earlier by Paris Match magazine.

Shaken Confidence

Confidence in Libor, the benchmark interest rate for more than $360 trillion of securities, was shaken following Barclays’s admission. The revelations provoked calls for tougher oversight of the financial system and pushed regulatory and criminal probes of Libor and other interbank lending rates, such as Euribor, to the top of the political agenda.

Germany’s parliament has scheduled a hearing for Nov. 28 on the issue, Frankfurter Rundschau reported today. The lawmakers have asked Deutsche Bank AG co-Chief Executive Officer Anshu Jain to testify, according to the newspaper.

The European Union has also taken action, with Competition Commissioner Joaquin Almunia opening probes to see if rate manipulation included cartel behavior. Michel Barnier, the bloc’s financial services chief, has urged swift adoption of a law adding jail time to tougher penalties to prevent any repeat of the scandal engulfing Libor and other interbank rates. The legislation would empower courts to hand jail terms to those found guilty of market abuse and insider dealing.

To contact the reporter on this story: Heather Smith in Paris at

To contact the editor responsible for this story: Anthony Aarons at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.