The U.K. markets regulator notified a bank manager and a rate submitter that they face penalties for their involvement in manipulating benchmark rates in the first civil cases against individuals in the global probe.
The Financial Conduct Authority issued two so-called warning notices against the people today, which may lead to fines or bans from working in the finance industry. The London-based regulator didn’t name the people or banks involved.
Firms including Barclays Plc (BARC) and UBS AG (UBSN) have been fined about $6 billion for manipulating the London interbank offered rate, or Libor, and related benchmarks. Prosecutors and regulators around the world are investigating whether firms colluded to rig rates to benefit their own derivatives trades. Ten people have been charged in parallel U.S. and U.K. criminal probes.
The bank manager “was personally aware of and condoned” traders asking rate submitters to manipulate their submissions over a three-year period, and knew their requests were taken into account, the FCA said in statements on its website.
The manager was aware of the bank’s lack of controls governing the procedure and didn’t take any steps to correct it, and knew of the conflict of interest with submitters also trading derivative products referenced to interest rate benchmarks, the regulator said.
The rate submitter “took into account requests made by traders to benefit their positions” and colluded with an interdealer broker acting on behalf of a trader from another lender, and directly with traders at another panel bank, over a two-year period, the FCA said. Both notices were issued on Nov. 28 and published today.
Tom Hayes, a former trader at UBS and Citigroup Inc. who has been at the center of the criminal investigation, pleaded not guilty in London in December, along with two former RP Martin Holdings Ltd. brokers, Terry Farr and James Gilmour. Hayes is scheduled to stand trial in January. Farr and Gilmour will follow in September, giving prosecutors time to charge and add more people to the second trial.
Several former Barclays traders suspected of involvement in Libor manipulation were ordered to report to U.K. fraud prosecutors for interviews at the end of last year, signaling that more charges may be coming soon. Seven people - three former ICAP Plc (IAP) brokers, three who worked for the Dutch lender Rabobank, and former UBS trader Roger Darin - have been charged by U.S. authorities.
ICE Benchmark Administration Ltd., part of the IntercontinentalExchange Group, took over the role as Libor administrator from the British Bankers’ Association today.
The role, which involves overseeing who will calculate the rate, what banks will submit to it and how the process will work, was stripped from the BBA after FCA Chief Executive Officer Martin Wheatley reviewed the Libor-setting process in 2012 and recommended the change.
Under the BBA’s watch, Libor was determined by a daily poll of six to 18 panel banks, including Barclays and Deutsche Bank AG, that asked them to estimate how much it would cost to borrow from each other for different periods.
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