Photographer: Matthew Lloyd/Bloomberg

Ex-RBS Trader Danziger Banned, Fined $338,000 Over Libor

Updated on
  • Neil Danziger ‘routinely’ made requests to rig Libor rate
  • RBS was fined 87.5 million pounds by FCA in 2013 over Libor

A former Royal Bank of Scotland Group Plc trader was fined 250,000 pounds ($338,000) and banned from working in the industry by the U.K. markets regulator for manipulating Libor, five years after the bank was penalized for its role in the scandal.

The Financial Conduct Authority issued the penalty against Neil Danziger Monday, saying the ex-trader “routinely” made requests to RBS Libor submitters to alter the rate to suit his trading positions between 2007 and 2010. The regulator said Danziger, 42, also took trading positions into account when he acted as a submitter during the period.

Danziger is the latest in a string of traders who have been fined, banned or sent to prison over the manipulation of the London interbank offered rate, a key interest-rate benchmark used to value trillions of dollars of securities. A dozen banks and brokerages have been fined about $9 billion since global authorities started investigating the behavior a decade ago. RBS was fined 87.5 million pounds by the FCA for its role in the scandal in 2013.

"Danziger’s reckless disregard of these standards has no place in the financial services industry," Mark Steward, FCA executive director of enforcement and market oversight, said in a statement. "Market participants cannot turn a blind eye to what the community, through its laws and regulations, expects nor apply their own, lower standards."

Danziger, who worked at RBS from 2002 to 2011 as an interest-rate derivatives trader, mainly focused on the Japanese yen variant of Libor. As well as attempting to influence the bank’s own submissions with his trading positions, he used a broker to try to influence other lenders’ Libor submissions, according to the FCA. He also placed so-called "wash trades" -- trades with no legitimate purpose other than to pay commissions to brokers to thank them for favors. Danziger denied that was the reason for the transactions.

‘Little Switchy’

In June 2009, a broker called Danziger’s colleague to ask if he was in the office and said Danziger owed him "a little switchy today," the FCA said in its penalty notice. The broker had been out drinking with Danziger the night before and told another individual they’d run up a 2,000 pound-bill.

The broker said he’d asked Danziger to help him out because of the bill and that Danziger had told him to "put a switch through." Danziger executed a wash trade later that day, the FCA said.

Danziger’s lawyer said that the former trader, who was first interviewed by regulators in 2012, is a scapegoat for the “systemic problems relating to Libor.”

‘Exhausted, Drained’

“The last five years have been incredibly challenging,” Ben Rose, a lawyer at Hickman and Rose in London, said in a statement. “He is emotionally exhausted and financially drained. He leaves it to others, better resourced, to press the FCA for answers.”

A spokeswoman for RBS declined to comment.

Danziger isn’t the first RBS trader to face sanctions in relation to Libor. Former submitter Paul White was banned by the FCA last year over related conduct. The regulator said at the time he would have also been fined 250,000 pounds were it not for his "serious financial hardship." Andrew Hamilton, another former RBS derivatives trader, was also investigated by the U.K. Serious Fraud Office and FCA. The SFO said in 2014 it wasn’t taking any action.

The Danziger penalty was first issued in June 2014 and put on hold a month later at the request of the SFO, which was also investigating the case.

    Before it's here, it's on the Bloomberg Terminal.