"Libor is the basis for calculating practically every derivative known to man." Now, more than five years after alarms first sounded, regulators and prosecutors are closing in. Three people, including a former trader at UBS and Citigroup Inc., were arrested in London this week in connection with the probe into rate manipulation, the first apprehensions in an investigation involving more than half a dozen agencies on three continents. Barclays paid a record 290 million-pound ($468 million) fine in June to settle with regulators, and the London-based lender's three top executives, including Chief Executive Officer Robert Diamond, departed after criticism by bank supervisors and politicians. Other firms, including RBS and Zurich-based UBS, are negotiating settlements, according to people with knowledge of the discussions. UBS faces a fine within days that may surpass the one levied on Barclays, one of the people said. Spokesmen for Barclays, RBS and UBS declined to comment.