U.S. and British authorities on Wednesday fined ICAP, the world’s biggest interdealer broker, $87-million and criminally charged three former employees for their role in the Libor benchmark rate rigging scandal.
The scandal, which has laid bare the failings of regulators and bank bosses, has already seen three banks fined $2.6-billion, four individuals charged, scores of institutions and traders grilled and a spate of lawsuits launched.
The U.S. Department of Justice (DoJ) charged New Zealand resident Darrell Read alongside Daniel Wilkinson and Colin Goodman, both from England, with wire fraud and conspiring to commit wire fraud in a criminal complaint.
Simultaneously, the U.S. Commodity Futures Trading Commission (CFTC) and UK Financial Conduct Authority (FCA) ordered ICAP’s ICAP Europe Ltd unit (IEL) to pay $65-million and 14 million pounds ($22-million) respectively to settle allegations of wrongdoing.
“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 ICAP Chief Executive Michael Spencer in a statement.
“Their conduct contravenes all that ICAP stands for.”
Tracey McDermott, the head of enforcement at the FCA, said the misconduct cast a shadow over the financial services industry.
“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.”
ICAP, run by one of London’s wealthiest businessmen, is the first interdealer broker sanctioned for manipulating interest rates such as Libor, the London interbank lending rate, a benchmark that is used to price trillions of dollars worth of products such as derivatives and mortgages worldwide.
Brokers such as ICAP, which match buyers and sellers of bonds, currencies and swaps, have faced allegations that their employees actively colluded with traders seeking to fix rates for personal gain – and were handsomely rewarded.