Deep Into The Lieborgate Rabbit Hole: The Swiss Hedge Fund Link?

Just because 16 banks did the rigging, doesn't mean Almost Everyone Else didn't know about it, and use it to their advantage.  Derivatives are firmly involved now, and so is Geneva, Switzerland.  The derivatives Leviathan rises from the depths; The monster's size grows quickly to the horizon, then beyond.  We gasp at its size, unable to process..  Zero Hedge connects all the dots.  Excerpts:


That Lieborgate is about to spill over and take down many more banks is well known: as previously reported that the world's biggest bank Deutsche Bank, has become a rat for the Liebor prosecution having turned sides. The reason: "Under the leniency programs of the EU, companies may get total immunity from fines or a reduction of fines which the anti-trust authorities would have otherwise imposed on them if they hand over evidence on anti-competitive agreements or those involved in a concerted practice." However, just like in the case of Barclays (with Diamond), JPM (with Bruno Iksil), UBS (with Kweku) and Goldman (with Fabrice Tourre), there always is a scapegoat. Today we find just who that scapegoat is. From Bloomberg: "Regulators are investigating the possible roles of Michael Zrihen at Credit Agricole, Didier Sander at HSBC and Christian Bittar at Deutsche Bank, the person said on condition of anonymity because the investigation is ongoing. The names of the banks and traders were reported earlier today by the Financial Times."



Of course, as so very often happens, the link between the investigated firm, and the person in question no longer exists - after all what better brute way to tie up loose ends, than to fire the person in question at some point in the past: "Michael Golden, a spokesman for Deutsche Bank, confirmed that Bittar left the bank last year and declined to comment on the investigation." Not surprising. Yet this is where the story gets interesting, and provides a whole new twist on the Lieborgate scandal.


Notice that up until now, the only firms that have been implicated in Lieborgate are, by definition, the BBA member banks which provided daily USD Libor fixings. However, nowhere is it said that this information never exited this close knit cabal of 16 manipulating banks. After all, there are $2 trillion in AUM (a number that is likely $5 trillion when accounting for all the rehypothecated assets at the Prime Brokers) out there run by unregulated hedge funds, and all of these entities would certainly find a way to make a pretty buck on even the tiniest 'manipulated', and leveraged Libor arbitrage. And would also pay a pretty penny to get that info. Which brings us back to Bittar. And LinkedIn.
And:

The original LinkedIn list continues (much to the likely chagrin of at least one SocGen trader and one more CA-CIB banker), but we have seen enough, and the pattern is forming: it appears that the bankers who were allegedly involved in Libor manipulation in some capacity in their previous lives working for banks, decided to quietly depart under mutually acceptable conditions and find new lives, still trading Libor and IR derivatives, in some of the best known, and even less regulated, Swiss hedge funds and private banks.




Our question then is the following: while much has been said about Lieborgate as being purely associated with the 16 BBA USD fixing member banks, just who else made money, and is the traditionally quiet and always under the radar Swiss financial community about to be exposed for having profits far more from Lieborgate than any of the BBA member banks?


Because if the stigmatized traders were accepted with open arms at various Swiss hedge funds, one would think there may, just may have been, some quid pro quo in the past (for those who have worked in the financial industry this needs no further explanation).


We eagerly await the answer, and perhaps the Swiss regulators to finally wake up to their own "pristine" financial industry.


So really..  Just about anyone remotely on the inside could pay for manipulated rate information, and now, it's possible that many, many, many people did, and they all profited from it;  A lot.  All on the backs of those who didn't.  Also known as "muppets," also referred to as "customers." 

LIBOR goes global in three..  Two..

Top Barclays exec claims boss told him to rig rates

Eventually, they'll all turn on each other.  In the meantime, you might want to try some flavored butter with your popcorn..  Stay tuned; It's gonna be a grrrrrrreat show!  Raw Story:

A top Barclays executive who quit over the bank’s rigging scandal told British lawmakers Monday that he was instructed by his former boss Bob Diamond to manipulate key inter-bank lending rates.



Jerry del Missier resigned two weeks ago over the scandal, which has also claimed the jobs of Diamond and Barclays chairman Marcus Agius and rocked the City of London, one of the world’s top financial hubs.

It had emerged that del Missier told Barclays traders to manipulate the bank’s submissions for the Libor and Euribor rates in a bid to make it seem as if other banks were more willing to lend to Barclays than they actually were.
Diamond has said that del Missier did this after “misinterpreting” a phone conversation between Diamond and Bank of England (BoE) deputy governor Paul Tucker in October 2008.


But asked by the British parliament’s Treasury Select Committee on Monday whether the phone call was “an instruction” from Diamond to cut the submissions, del Missier replied: “Yes, it was.”
Diamond, who stepped down as Barclays chief executive hours before del Missier on July 3, previously told the committee he had not instructed del Missier to manipulate the rates.


According to Diamond’s account of the phone call, Tucker had told him that Barclays’ Libor submissions did not always need to be so high.


Diamond said Tucker told him that, against the backdrop of the global financial crisis, British officials were interpreting Barclays’ relatively high Libor submissions as a sign that the bank was struggling.


Diamond told the committee that he had not interpreted the conversation as an instruction from the central bank to rig the rates, but del Missier had.


On Monday, del Missier said: “What was communicated to me by Mr Diamond was that there was political pressure … regarding Barclays’ health and that we should get our Libor rates down.”



Del Missier said he relayed the conversation to the head of the money markets desk and “fully expected that the Bank of England’s views would be incorporated in the Libor submissions.”


He added: “I would have expected that taking that into account would have resulted in lower submissions.”


However, asked by one of the panel if he had been told outright by Diamond to invent submissions, the Canadian replied: “No sir, that’s not what Mr Diamond said.”


Del Missier said that in the context of the events that were shaking the financial world at the time, “it didn’t seem a significant event.”


Asked if he knew that manipulating the Libor rate was illegal, del Missier said: “No, it did not seem an inappropriate action given that this was coming from the Bank of England.”


Barclays was fined £290 million ($452 million, 360 million euros) after admitting attempting to manipulate the Libor and Euribor rates between 2005 and 2009.


Libor (London Interbank Offered Rate) is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent.


The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money.

More to follow:  More testimony, more daggers, more bloodletting.  How's that popcorn?  Delicious?