Libor scandal claims its latest victim as Icap coughs up £55m

The UK broker has been fined £55m for its part in the Libor rate-fixing shambles.

by Gabriella Griffith
Last Updated: 13 Nov 2013

The Libor scandal looks set to rattle on; three Icap brokers are the latest figures to be charged over the rate-rigging affair and the firm itself is facing a £55m fine for its part.
Icap has been under investigation by regulators for allegedly manipulating the London interbank offered rate (Libor), the global benchmark on which trillions of mortgages and loans are set. After today’s ruling it must pay £14m to the British regulator and around £40.5m to the regulator in the US.

The three former Icap brokers are to be charged in the US, and have been named as Daniel Wilkinson, Colin Goodman and Darrel Read – they are each charged with wire fraud and conspiring to commit wire fraud. They face a maximum penalty of 30 years in prison if they are convicted.
‘We deeply regret and strongly condemn the inexcusable actions of the brokers who sought to assist certain bank traders in their efforts to manipulate YEN Libor,’ said Michael Spencer, chief executive of Icap and former Tory party treasurer.
‘Their conduct contravenes all that Icap stands for…None of the three individuals at the centre of the activity remains with the firm. Others are either no longer with the company or are being disciplined,’ he added.
The brokers have been accused of conspiring with a UBS rates trader to ‘disseminate false and misleading information,’ about yen borrowing rates to other banks.
A series of incredibly incriminating emails have been used as evidence against the brokers by the Commodity Futures Trading Commission.

In the emails, the brokers were seen to gloat about their influence on the market and discuss compensation for their meddling.
(If like us, you have an aversion to the use of smiley faces in emails, avert your eyes now.)
Here’s some boasting:

‘i hope that 6m [six-month] Libor has got me back in your good books!! used all my powers of persuasion on that one ;-) … think [Bank A and Bank B] must have looked at [Cash Broker A’s] first suggestion ... they both moved up 11bps to 1.10’
‘sending out higher than he thinks so hopefuly the sheep will just copy’
Some offers of compensation:

 ‘Hi [Cash Broker 1], Thanks again for all your efforts … Can you do your best to drive these Libors higher,especially 3 mos if you can and it is still well bid. ... UBS had to stagger their move up but will definitely be in the count today. … ps Bubbly on its way with [Senior Yen Trader]’

'Make 6m go lower! They r going up. [Senior Yen Trader] will buy you a ferrari next yr if you move 3m up and no change 6m.'

'Waiting for my credit card to get returned to me from a drunken night out bowling, but will be supplying you with copious amounts of curry on it's imminent return. Cheers.'
And some more gloating:

‘brooliant!! They are making fortunes with these high fixings!!! :-)’
We’d wager the authors of these emails certainly aren’t smiling now…
Icap is certainly not the only institution to get caught up in this mess. It all kicked-off last year when Barclays was fined £290 the British and American authorities for attempting to manipulate the rate. RBS wasn’t far behind with a £390m fine from the same authorities on both sides of the pond.
The first British trader to be prosecuted was Tom Hayes, a former UBS and Citigroup banker who appeared in court in June. Two former brokers from RP Martin, Terry Farr and James Gilmour, have also been charged by the Serious Fraud Office.

One thing this case has shown is individuals can no longer act without fear of retribution, expecting their firm to take the flack if something goes wrong. Well, that and the fact that bubbly, curry and Ferraris are all still popular currency in the City.

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