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Forensic investigation continues

Member: Nifa

The Serious Fraud Office (SFO) is looking at the activities of a Barclays’ hedge fund after allegations that it profited from using confidential information on Libor “low-balling” during the financial crisis. According to The Times, the fraud investigators are looking at the Cayman-registered Ricardo Master Fund as part of a broader investigation into Libor rigging.

Low-balling is when banks or other institutions deliberately offer a price that is below the fair value of a market in order to create a false impression. In this case, Barclays is alleged to have low-balled its sterling Libor rate in order to paint a false picture of its financial health and to have paid £130m of profits from its interest rate derivatives business into an offshore fund named Ricardo, after Rich Ricci, the former co-head of Barclays’ investment banking business.

The bank has declined to comment on this new development but it admitted to low-balling in 2012 during a separate strand of the investigation into the Libor scandal. However, other strands have been followed and now appear to have led to Ricardo again.

Forensic investigations can go on for years, as they are not considered completed until the forensic accountants have pulled together every tiny piece of information and followed every trail to its conclusion. The formal Libor investigation has been going since 2010 and as recently as last month there was a trial of six men who were accused of conspiring with former City and UBS trader Tom Hayes, who was jailed last year. All six were acquitted but there are several more trials scheduled for this year, both into Libor and its euro-based equivalent Euribor.

Author: Roger Isaacs, 12 February 2016

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