UK's FCA fines Tullett Prebon in probe involving Libor manipulation

Reuters Finance 1 month ago

(Reuters) - Britain’s Financial Conduct Authority (FCA) said it has fined interdealer broker Tullett Prebon 15.4 million pounds ($19.18 million) related to an investigation over some trades between 2008 and 2011 that involved attempted Libor manipulation.

Citing an example from 2009, the FCA said the motivation to pay the brokerage by the traders was a promise by the broker of assistance in the attempted manipulation of Libor on the part of one trader.

The London interbank offered rate (Libor) rigging scandal that unfolded in 2012 led to billions of dollars in fines on major banks and jail sentences for traders convicted of manipulating the benchmark for profit.

Libor is a global benchmark for interest rates.

From 2008 to 2011, a number of Tullett Prebon (Europe) Limited (TPEL) brokers put in place improper trades in order to generate fees for the brokerage that should not have been paid, the FCA said, adding that one of trade mechanisms identified was wash trades.

Tullett Prebon became TP ICAP after its merger with ICAP.

Banned under exchange rules, wash trades involve having the same dealer on opposite sides of one trade, simultaneously buying and selling the same commodity.

“While these trades did not mislead the market, nor amount to market abuse, the wash trades were entirely improper, undermining the proper function of the market,” Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said.

Tullett Prebon’s rates division had ineffective controls around broker conduct between 2008 and 2010, the FCA said.

The FCA said Tullett Prebon failed to be open and cooperative with the watchdog and a breach occurred between August 2011 and October 2014, related to the FCA’s request to Tullett Prebon for broker audio tapes.

TP ICAP said the FCA recognized that TPEL fully cooperated with the investigation into the relevant trades and conducted its own review of certain trades which it disclosed to the FCA.

The FCA had also found that at the time there were inadequate systems and controls in place to deal with the risk of improper broker conduct, the company said in a separate statement.

“None of the individuals involved in the relevant broking activities remain with our firm, which has long since taken the opportunity to significantly enhance its systems and controls to comply with regulatory expectations,” TP ICAP said.


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