U.K. regulators may issue the first penalties against individuals in their probe of Libor manipulation as soon as next month, three people with knowledge of the case said.
The Financial Conduct Authority sent notices to traders in the past two months outlining their findings, according to the people, who asked not to be named because the case is private. The FCA is in discussions with some of the traders over proposed penalties, including fines of more than 100,000 pounds ($160,000), one of the people said.
The targets have one month to respond to the claims, two of the people said. The agency plans to levy civil fines early next year, though some may be delayed if the people contest the penalties or the findings, known as preliminary investigation reports.
“Individuals may be more inclined to fight these fines if they risk losing approved-person status because of the implications on their future job prospects,” said Peter Lodder, a senior trial lawyer at 2 Bedford Row in London.
More than a half dozen finance firms, including Barclays Plc and UBS AG, have been fined a total of about $6 billion since June 2012 for manipulating the London interbank offered rate, or Libor, the benchmark interest rate for more than $360 trillion of securities worldwide. More firms will face fines next year and seven people are being prosecuted in parallel U.S. and U.K. probes.
Traders facing civil fines probably won’t face criminal penalties, because the regulator coordinates with prosecutors and any public fine could prejudice a trial under U.K. law, according to two people involved in the situation.
“The FCA appears to have made a judgment, in terms of criminal and civil prosecutions, as to who fits where,” Lodder said. “This will have taken a fair amount of time because of the extent of document review needed and the novelty of this case.”
If traders contest the FCA’s reports, the case will be heard by the regulator’s internal tribunal, the Regulatory Decisions Committee, a panel made up of industry figures including lawyers and accountants. The RDC’s decision can then be contested in court. Any fine would make it more difficult to get FCA approval to work at another company in the finance industry.
A spokesman for the FCA declined to comment.
Tom Hayes, a former UBS and Citigroup Inc. trader who was the first person to be charged over Libor, is scheduled to enter a plea in a London court next week. Two former RP Martin Holdings Ltd. brokers, Terry Farr and James Gilmour, are also set to enter pleas at the same hearing.