UK fraud prosecutor charges two brokers in Libor probe

Mon Jul 15, 2013 1:21pm EDT
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By Steve Slater and Tommy Wilkes

LONDON (Reuters) - Britain's fraud prosecutor on Monday charged two former brokers at interdealer broker RP Martin with rigging Libor benchmark interest rates, broadening the scope of the investigation into the scandal beyond big banks.

The Serious Fraud Office (SFO) said it had charged Terry Farr and James Gilmour with conspiracy to defraud, seven months after arresting them. They are the first staff from a broking firm charged in connection with the Libor investigation in Britain.

The two were arrested just before Christmas along with former UBS UBSN.VX and Citigroup (C.N: Quote) trader Tom Hayes, who was last month charged with eight counts of conspiracy to defraud as the SFO laid the groundwork for what could be the first Libor trial.

A central cog in the world financial system, the London interbank offered rate (Libor) is used as a reference for more than $550 trillion in contracts ranging from complex derivatives to everyday credit card bills.

Trust in the benchmark was shaken by revelations last year that traders had routinely manipulated it, prompting a series of investigations by regulators and other authorities.

Britain's Barclays (BARC.L: Quote) and Royal Bank of Scotland (RBS.L: Quote) and Switzerland's UBS have been fined by U.S. and UK authorities for manipulating Libor, and more banks and individuals are under investigation.

The charges against Farr and Gilmour will increase scrutiny of the role played in the scandal by interdealer brokers, who act as middlemen between the buyers and sellers of financial securities such as bonds, currencies or interest rate swaps.

In its settlement in December, UBS admitted that its traders paid bribes to brokers in return for their help rigging interest rates. The payments to unnamed brokers ran at 15,000 pounds ($22,700) per quarter.   Continued...

A sign is displayed in an unmarked Serious Fraud Office vehicle parked outside a building, in Mayfair, central London March 9, 2011. REUTERS/Andrew Winning