BROKERS at top City firm Tullett Prebon treated clients to “lavish” all-expenses-paid jollies, which included trips to Las Vegas, Monte Carlo and Ibiza, in return for fake trades that paid commission and could have manipulated markets between 2008 and 2011, the financial watchdog ruled on Friday.
The Financial Conduct Authority fined the broker, now known as TP Icap after a deal in 2016, £15.4 million for a rigging scandal which included attempts to manipulate Libor, the London interbank offered rate which is linked to UK mortgages.
The Tullett brokers were found to have engaged in so-called “wash” trades, which involved buying and selling the same financial instrument at the same time in order to generate the appearance of liquidity in the market to encourage others to deal.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “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.” Tullett is an interdealer broker which does deals for top investment banks including JPMorgan, Goldman Sachs and Morgan Stanley. It has around 2500 UK staff based mostly at Bishopsgate.
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. It had no effective control over the brokers, said the watchdog. TP Icap chief executive Nicolas
Breteau said: “We are pleased to put this historical matter behind us.” He added that none of the individuals involved remain with the firm. City insiders note that regulation is lately so tough that even a moderately expensive lunch has to be signed off by compliance departments.
The FCA said Tullett’s entertainment included drinks, dinners, golf vacations and trips abroad. “This is a people business,” said one senior manager by way of explanation to the FCA. Over the period under investigation, the firm had £900 million of revenues a year, of which 3%, £27 million, was typically spent on client entertainment. A monthly “doughnut report”, a reference to the shape of a graphic on internal documents, tracked entertainment expenditure by departme