LONDON - Britain's Serious Fraud Office (SFO) and London police have made the first arrests as part of a global investigation into the manipulation of interbank lending rates, a scandal that has rocked the banking industry.
The SFO said on Tuesday three British men, aged 33, 41 and 47, were taken to a London police station for interviews in the early morning after three properties were searched.
An SFO spokesman said the interviews were continuing.
"The men are all British nationals currently living in the United Kingdom," the SFO said in a brief statement.
Prosecutors and regulators across Europe, the United States, Canada and Japan have been investigating how traders attempted to rig key benchmark lending rates such as Libor (the London interbank offered rate) after the US Commodity Futures Trading Commission initiated an industry-wide probe in October 2008.
Dozens of people have been fired by banks and are under investigation in the probe into benchmarks like Libor, which underpins around $550 trillion of loans and financial contracts.
Sources familiar with the investigation said in July regulators and prosecutors in the United States and Europe were closing in on individual traders and that arrests were expected shortly.
In the first settlement with UK and US regulators, Barclays agreed in June to pay $450 million in fines and penalties to settle allegations by regulators and prosecutors that some of its employees tried to manipulate key interest rates from 2005 through 2009.
It was also accused of low-balling rates during the 2007/08 credit crunch.
Similar financial settlements are expected shortly with banks such as Switzerland's UBS and Britain's RBS, although around a dozen banks are being investigated.
Spokespeople for Barclays, UBS and RBS declined to comment on the arrests.