London-listed broking firm ICAP has been fined a total of £55m by US and UK regulators for misconduct relating to rigging of the London Interbank Offered Rate (LIBOR).
The Financial Conduct Authority (FCA) has fined ICAP Europe Ltd (IEL) £14m for its part in colluding with traders at UBS to fix the JPY (Japanese Yen) LIBOR rates for the benefit of the traders during the period October 2006 to November 2010.
According to the FCA, three brokers (including one manager) on the JPY derivatives desk were central to the collusion, plus at least seven other individuals (including another manager) on three other desks. The FCA said UBS, which was fined £160m in December 2012 for failings connected to LIBOR, made at least 330 written requests to IEL brokers for inappropriate submissions, plus an unknown number of oral requests.
The FCA says the IEL brokers deliberately disseminated incorrect or misleading LIBOR submission levels by emailing skewed suggestions to some Panel Banks as to where they believed the published JPY LIBOR rate would set for a particular day, and also requesting certain Panel Banks to make specific JPY LIBOR submissions.
In return, the brokers were said to receive a number of payoffs, including in one case a £5,000 a month corrupt bonus payment, plus offers of meals out, luxury goods and champagne.
The regulator described IEL's risk management systems and controls as 'inadequate' with no effective oversight of the brokers involved. During the period in which the misconduct occurred, there was no audit of the desk concerned, and the FCA said the brokers' misconduct was exacerbated by a poor compliance culture within IEL which 'was a result of its heavy focus on revenue at the expense of regulatory requirements'.;>
Tracey McDermott, FCA director of enforcement and financial crime, said: 'The findings we publish today illustrate, once again, individuals within the industry acting with a cavalier disregard both for regulatory obligations and the interests of the markets. IEL's significant failings in culture and controls allowed that misconduct to flourish and fell far short of our expectations.'
IEL agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount under the FCA's settlement discount scheme. Without the discount, the fine would have been £20m.
The broker has also agreed to settle an action brought by the US Commodity Futures Trading Commission (CFTC), which imposed a financial penalty of $65m (£41m). The US Department of Justice (DoJ) has charged three former ICAP brokers alleged to have been at the centre of the JYP LIBOR scheme with one count of conspiracy to commit wire fraud and two counts of wire fraud.
