Britain's Serious Fraud Office arrests three in Libor-tampering scandal

Britain's Serious Fraud Office (SFO) and City of London Police made the first three arrests in global probes into tampering with benchmark interest rates, notably the London interbank offered rate (Libor).

The three men arrested, aged 33 to 47, were British nationals living in the country, the SFO said. The agency - an independent British government department - and police also searched three homes in Surrey and Essex.

Global authorities are investigating claims that more than a dozen banks altered submissions used to set benchmarks such as Libor to profit from bets on interest-rate derivatives or make the lenders' finances appear healthier.

Sources said Thomas Hayes, a former trader at UBS and Citigroup, was one of those arrested. The other two worked at brokerage firm RP Martin, according to the sources.

Swiss lender UBS is expected to face a fine as early as this week that may surpass the record £290 million (HK$3.61 billion) paid in June by Barclays, Britain's second-biggest bank, to settle claims it attempted to manipulate Libor.

Arrests in Britain are made early in investigations, allowing people, who may not be charged, to be questioned under caution. David Jones, an SFO spokesman, declined to comment.