NY among states probing interest rate rigging

New York Attorney General Eric Schneiderman has launched an investigation into possible manipulation of LIBOR, the benchmark of international lending rates by global banks, his spokesman said on Sunday.

Schneiderman and Connecticut's Attorney General George Jepsen started the investigation six months ago, spokesman James Freedland said.

LIBOR, or London Interbank Offering Rate, is compiled from estimates by big banks of how much they believe they have to pay to borrow from each other. It is used for $550 trillion of interest rate derivatives contracts and influences rates on many lending transactions, including mortgages, student loans and credit cards.

"Working together, the New York and Connecticut attorneys general have been looking into these issues for over six months, and will continue to follow the facts wherever they lead," Freedland said.

The scandal, which is roiling global Wall Street banks, may have also nicked Nassau County's strained finances. Last week, Nassau Comptroller George Maragos called for an investigation into whether the manipulation may have cost the county as much as $13 million . Maragos sent a letter asking Nassau County Attorney John Ciampoli to investigate the matter and take any necessary legal action.

Barclays Plc, the bank at the center of the LIBOR scandal, was fined a record $450 million last month by U.S. and British authorities for manipulating the rate, but the deal does not shield Barclays employees from criminal prosecution.

Schneiderman has powerful tools in his legal arsenal, and can bring both civil and criminal cases. -- Reuters