U.K. prosecutors may bring another round of charges against traders and brokers linked to the Libor scandal as soon as next month, according to lawyers familiar with the investigation, now in its fifth year.
The Serious Fraud Office will probably file the additional charges as soon as Oct. 21, when a court hearing is scheduled for three men who have already been arrested in the U.K. probe, said the lawyers, who asked not to be identified because prosecutors’ plans haven’t been made public. About six people may be charged with conspiring to rig the benchmark interest rate, the lawyers said.
Seven people have been charged in parallel U.S. and U.K. probes into the rigging of the London interbank offered rate after the U.S. Justice Department yesterday filed a criminal complaint against three former ICAP Plc (IAP) employees, two of whom are British. The SFO has been criticized for lagging behind its U.S. counterparts in an investigation of a rate that is closely associated with the country’s financial industry.
“The laying of charges against ICAP employees in the U.S. will increase pressure on the SFO to act,” said Peter Lodder, a former chairman of the Bar Council of England and Wales and a barrister at 2 Bedford Row in London. “With a new director, and a significant change of approach in favor of commencing criminal prosecutions, the SFO will not wish to appear to be a step behind the U.S. authorities.”
The SFO, which prosecutes white-collar crime and fraud, said that its Libor probe is continuing.
“We have so far charged three people and further developments are expected over the coming months,” the agency said in a statement.
The next group of charges could come as soon as the week of Oct. 21 when the hearing is scheduled in the previous cases, the lawyers said.
Tom Hayes, the former UBS AG (UBSN) and Citigroup Inc. (C) trader who became the first individual to be charged in the U.K. over Libor, is scheduled to enter a plea on charges related to manipulation of Libor on Oct. 21. Terry Farr and James Gilmour two former RP Martin Holdings Ltd. brokers, are set to appear for their next hearing the same day.
A lawyer for Gilmour, Sean Curran, declined to comment. Farr’s lawyers at Bindmans LLP and Hayes’s lawyers at Fulcrum Chambers LLP didn’t immediately respond to requests for comment.
In the U.S. case filed yesterday, the former ICAP brokers were charged with wire fraud and conspiracy to commit wire fraud. ICAP was also fined $88 million by regulators in the U.S. and U.K. as part of the five-year-old probe into Libor rigging.
Two former derivatives brokers and a former cash broker, one of whom was referred to at ICAP as “lord Libor,” were charged, according to the criminal complaint. They face as much as 30 years in prison if convicted of the most serious counts.
“These three men are accused of repeatedly and deliberately spreading false information to banks and investors around the world in order to fraudulently move the market and help their client fleece his counterparties,” Mythili Raman, the acting assistant attorney general of the DOJ’s criminal division, said in a statement.
Darrell Read, who resides in New Zealand, and Daniel Wilkinson and Colin Goodman, both from England, were charged by the U.S. for allegedly helping Hayes rig rates, the DOJ said.
Wilkinson’s lawyer, Matthew Frankland in London, said his client denies the allegations and that any legal proceedings should take place in the U.K.
“I see no justice or common sense in the decision to prosecute this man in the States”, Frankland, a lawyer at Byrne and Partners LLP, said in an e-mail. “It would be surprising and disappointing if the SFO simply caved in again to pressure from the DOJ and allowed a separate prosecution to take place in the U.S.”
Lawyers at Kingsley Napley LLP, who represent Read, and BCL Burton Copeland Solicitors, who represent Goodman, declined to comment.
Goodman, the cash broker, sent out a daily e-mail to his contacts outside of ICAP, including derivatives traders at large banks and people responsible for providing the British Bankers Association, with Libor submissions, the U.S. said in the complaint.
Arrest warrants issued Sept. 13 for the men in London and Wellington, New Zealand, remain unexecuted, according to court records.
The note, where Goodman -- the ex-cash broker -- would allegedly include his suggestions on where yen Libor would be each day across eight borrowing periods, was used to disseminate misinformation to help Hayes, the U.S. alleged.
London-based Barclays Plc (BARC), Zurich-based UBS and Royal Bank of Scotland Group Plc have previously been fined as part of the probe into Libor, the benchmark for more than $300 trillion of securities from mortgages to student loans. Firms including Rabobank Groep, Lloyds Banking Group Plc and Deutsche Bank AG are still under investigation.
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