Ex-Tullett Broker Says He Never Acted on Libor-Rigging Messages

A former broker at Tullett Prebon Plc said in a lawsuit over his firing that he never tried to manipulate Libor rates, calling messages with a UBS AG banker “misleading.”

Noel Cryan, who was dismissed in September for gross misconduct, said in London court documents that despite exchanges with a UBS trader, he never asked anyone at Tullett Prebon to “influence Libor in any way.”

“Although he had been prepared” to give “the impression that he was able to assist with the manipulation of yen Libor” to keep getting business from the UBS banker, Cryan “had never in fact done so,” Cryan’s lawyer said in a complaint filed in February and released by the court last week. Tullett Prebon is counter-suing for repayment of bonuses and its legal costs.

Authorities have handed out fines totaling more than $6 billion over manipulation of the London interbank offered rate and other benchmarks linked to about $300 trillion of contracts worldwide. UBS dodged a 2.5 billion-euro ($3.4 billion) European Union fine for being the first to cooperate with a probe into yen Libor manipulation. The Zurich-based bank was fined about $1.5 billion in the U.S. as well as the U.K. and Switzerland.

U.K. prosecutors have charged nine people with criminal misconduct in relation to the scandal.

Cryan, 48, isn’t one of them. He said investigations into his conduct had ended and allegations against him were dropped. The lawsuit is seeking his annual salary of 150,000 pounds ($250,000), plus bonus.

Dismissed, Discarded

“My client, after 20 years loyal service, is appalled by his treatment by Tullett Prebon and he is determined to vindicate his position in these High Court proceedings,” Cryan’s lawyer, Peter J. Coyle, said in an e-mailed statement. “My client feels very strongly that to be dismissed and discarded as a result of following clear and unequivocal managerial instructions is not something which should be endorsed by our legal system.”

Nigel Szembel, a spokesman for the inter-broker dealer, declined to comment, and referred to documents the company filed in its defense. The bank is counter-suing Cryan for the return of 160,000 pounds in bonuses, saying the former broker’s lawsuit is “embarrassing and has no real prospect of success.”

During the disciplinary proceedings, Cryan admitted “he had arranged [the trades]” with the UBS banker “on the understanding and expectation that the claimant would then, as quid pro quo, contact the defendant’s yen cash broker with the intention of asking them to assist” with the manipulation of yen Libor, Tullett Prebon said in its defense documents filed March 27. UBS declined to comment in an e-mail.

Disciplinary Hearings

Tullett Prebon fired Cryan following internal disciplinary hearings that started in August. He said the brokerage accepted his version of events related to Libor manipulation.

The bank also accused him of conducting so-called wash trades, where counterparties place two or more matching trades without any real commercial purpose through a broker that cancel one another out while triggering fees for the middle man.

Cryan said that senior managers encouraged him to conduct the wash trades to generate revenue after seeing fees on yen Libor interest rates at a rival broker reached 100,000 pounds.

Cryan said his managers at Tullett Prebon were aware of and encouraged the practice. One allegedly told him to “get involved.”

Some of the wash trades were conducted after conversations by another Tullett Prebon employee with former Royal Bank of Scotland Group Plc banker Neil Danziger, Cryan said. Danziger was fired following internal probes into Libor manipulation.

Cryan said he then conducted wash trades with UBS with the knowledge of senior Tullett Prebon management.

Tullett Prebon in its own filings, said its compliance department had clearly identified the practice as market abuse and denied managers knew about Cryan’s trades.

Danziger declined to comment on the lawsuit. Sarah Small, a spokeswoman for Edinburgh-based RBS didn’t immediately respond to messages seeking comment

The case is: Noel Cryan v Tullett Prebon Group Limited, High Court of Justice Queens Bench Division, HQ14X00711.

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