US states New York and Connecticut launched a probe into the possible manipulation and fixing of the London interbank offered rate (Libor) by several global banks over six months ago, while the US Justice Department is also building criminal cases against several financial institutions and their employees, according to media reports.

New York Attorney General Eric Schneiderman's spokesman confirmed to Reuters that the state had launched a probe into possible rigging of the key global interest rate.

"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," said New York Attorney General spokesman James Freedland to Reuters.

He also added that Schneiderman, along with Connecticut's Attorney General George Jepsen, started the investigation six months ago.

Meanwhile, the New York Times cited unnamed official sources that the U.S. Justice Department is building criminal cases against several financial institutions and their employees in relation to Libor fixing activities, but a conclusion could "take years and end in settlements rather than indictments [as the] investigation is unusually complex."

The report echoes the same outcome that followed Barclays in recent news.

This month, Barclays settled with US and UK regulators for a record £290m fine, for its involvement with fixing key interest rates Libor and Euribor, over several years.

While the bank has axed the number of traders which were involved with rigging rates and has led to CEO Bob Diamond, Chairman Marcus Agius and chief operating officer Jerry Del Missier stepping down, it settled for a record fine, rather than an indictment.

Since then, calls for a criminal investigation have led to the Serious Fraud Office (SFO) to confirm that is formally investigating Barclays, as well as other unnamed institutions and individuals into their roles in Libor manipulation.

Fixing Libor and Euribor

Libor and Euribor valuations directly influence the value of trillions of dollars of financial deals between banks and other institutions.

The benchmark reference rates are used in euro, US dollar and British sterling over-the-counter (OTC) interest rate derivatives contracts and exchange traded interest rate contracts.

According to FSA data, the notional amount outstanding of OTC interest rate derivatives contracts in the first half of 2011 has been estimated at $554tn.

The total value of volume of short term interest rate contracts traded on LIFFE in London in 2011 was €477tn, including over €241tn relating to the three month Euribor futures contract, which is actually the fourth largest interest rate futures contract by volume in the world.

Libor is published on behalf of the British Bankers' Association (BBA) and Euribor is published on behalf of the European Banking Federation (EBF).

Until February 2011 the US dollar Libor panel consisted of 16 banks and the rate calculation for each maturity excluded the highest four and lowest four submissions.

An average of the remaining eight submissions was taken to produce the final published Libor.

At each bank, "submitters" file their daily Libor rates to the BBA.

At Noon, the BBA then publishes the rate, based on averages from submissions made by a number of banks selected by the BBA or EBF.

Del Missier in the Docks

Former Barclays' COO Del Missier is one of the last senior officials to testify in front of the UK's Treasury Select Committee on July 16 at 1500 GMT.

He is expected to face a grilling from MPs over the level of involvement or awareness he had in the manipulation of Libor.

In particular, spectators expect Del Missier to be needled over his actions following the now infamous October 2008 call between ex-Barclays CEO Diamond and Bank of England's Deputy Governor Paul Tucker, where previous testimonies have strongly suggested that Del Missier "misinterpreted emails and actions" following the aftermath.

After Del Missier's testimony, some of the most senior officials at the UK regulator Financial Services Authority (FSA) is also meant to answer to MPs.

At 1545 GMT, Lord Turner, Executive Chairman, Andrew Bailey, Head of the Prudential Business Unit and Tracey McDermott, Acting Director of Enforcement and Financial Crime at the FSA are all expected to shed light on its investigation, dealings and communication with Barclays, after conflicting testimonial statements from Diamond, Agius and Tucker have caused confusion.