[ by Melanie Gretchen ]

The exhaustive investigation by regulators and prosecutors from several countries into the massive manipulation of the Libor interest rate by employees of about a dozen global banks, produced its first arrests.  According to The Serious Fraud Office of Britain, 3 British male citizens, ranging in age from 33 to 47, were taken into custody by police in early morning raids at their houses on the outskirts of London.

British criminal authorities tend to make their arrests during the early stages of an inquiry, though the arrests do not necessary neam the individuals will be formally charged with wrongdoing.  But the arrests signal a new phase of this long, slow-paced investigation - few developments, if any, have been reported since the CFTC and the U.K.'s FSA agreed on an earth-shattering $453 million settlement with Barclays in June 2012.

Profiles of those Arrested. Thomas Hayes, 33, is a former Citigroup and UBS trader.  A second, whose name was not available, worked for R P Martin, a British brokerage firm, which the Canadian investigation previously identified.  No details about the third.  Here's what's known about Hayes:

• Thomas Hayes was a trader at UBS from 2006 to 2009.
• He left UBS for Citigroup, but was suspended in 2010 for having approached a London trading desk about improperly influencing the Yen-denominated Libor rates.
• Citigroup fired Hayes in September 2010 and reported the nature of the termination to authorities.
• UBS reported to authorities that Hayes was discovered working with traders at other banks to influence rates.
• Documents filed by Canadian authorities highlight an alleged scheme that apparently ran from 2007 t0 2010, involving Mr. Hayes and other traders, who are said to have been colluding in an effort to manipulae Yen Libor rates, both up and down

Under U.K. law, Mr. Hayes and the other 2 who were arrested can be held for 24 hours for questioning.  Authorities can request extensions if they need more time for questioning.  The Serious Fraud Office, which has been criticized for its inability to police London's financial services section, began its Libor investigation in July.  The regulator received funding to pursue a criminal investigation related to Libor..

[C-I Note: Indeed, the Serious Fraud Office is behind the times: the U.K.'s Financial Services Authority (FSA) started its probe in 2010, according to the former CEO of the British Bankers' Association, Angela Knight.  The U.S. CFTC, which with the FSA, got the Barclays settlement, began its investigation shortly after the arrival of chairman Gary Gensler in 2009.]

"The S.F.O. works incredibly slowly.  It's not surprising that people have been arrested. But how long it will take to lead to criminal charges is another matter." -- a defense lawyer representing individuals implicated in the Libor inquiry. 

For further details, go to [Dealbook, 12/11/12], [Business Insider, 7/11/12], and [Dealbook, 8/12/12].