UK Locals broker fined £630,000 for LIBOR rigging
0Investment broker RP Martin has been fined £630,000 by the Financial Conduct Authority for manipulating LIBOR rates.
The firm, which runs the UK Locals website aimed at local authority treasurers, was found to have colluded with a trader at UBS to manipulate the Japanese Yen LIBOR rates between January 2007 and December 2010. The UBS trader made corrupt brokerage payments to reward Martins for their efforts to manipulate the LIBOR submissions of panel banks through the use of fake trades known as “wash trades”.
Tracey McDermott, director of enforcement and financial crime at the FCA, said that the company’s behaviour had been “unacceptable”.
She said: “The culture at Martins was that profit came first. Compliance was seen as a hindrance and the firm lacked the means to detect the “wash trades”.
“In this environment, broker misconduct was almost inevitable.”
The FCA found that Martins had communicated “skewed suggestions” to some panel banks as to where it believed the JPY LIBOR rate would set for a particular day.
It also created “spoof” orders with the aim of influencing panel banks’ views of the cash market so they would make submissions at levels that benefitted the UBS trader. It also requested certain panel banks should make specific JPY LIBOR submissions.
Martins’ misconduct involved several brokers over a number of years. Two brokers (including one manager) were central to the collusion, the FCA said, although at least three other individuals (including two managers) working across two desks played a role.
Martins’ risk management systems and controls were inadequate to monitor and oversee its broking activity, the watchdog concluded.
It escaped a larger fine of £3.6m only because it showed it could not pay a penalty of that size in addition to other regulatory fines that it faces in relation to LIBOR.
The fine was further reduced because it decided to settle at an early stage, and so qualified for a 30% discount.
A statement by the firm said: “RP Martin’s new senior management team co-operated fully with the FCA and CFTC in their investigations and entirely respect the fine and sanctions imposed. “Over the last 12 months the Board comprehensively restructured the firm’s governance, systems and controls, and compliance procedures.”
The UK Locals website is a is a real-time broking service providing local authorities with free access to live sterling, money market fund, PWLB and LIBOR rates.
