ICAP fined $87 million over Libor, three former staff charged

Wed Sep 25, 2013 7:53pm EDT
 
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By Kirstin Ridley, Clare Hutchison and Aruna Viswanatha

LONDON/WASHINGTON (Reuters) - U.S. and British authorities on Wednesday fined ICAP, the world's biggest interdealer broker, $87 million and filed criminal charges against three former employees over the Libor interest rate rigging scandal.

The scandal, which has laid bare failings by regulators and bank bosses over several years, has triggered a sprawling global investigation that has already seen three banks fined a total of $2.6 billion, four other people charged, scores of institutions and traders interrogated and a spate of lawsuits launched.

The U.S. Department of Justice charged former ICAP derivatives broker Darrell Read, his supervisor Daniel Wilkinson, and cash broker Colin Goodman with conspiracy to commit wire fraud and two counts of wire fraud - offences carrying sentences of up to 30 years.

Simultaneously, the U.S. Commodity Futures Trading Commission and Britain's Financial Conduct Authority ordered ICAP's ICAP Europe Ltd unit to pay $65 million and 14 million pounds ($22 million), respectively.

"These three men are accused of repeatedly and deliberately spreading false information to banks and investors around the world in order to fraudulently move the market and help their client fleece his counterparties," said Acting Assistant Attorney General Mythili Raman of the Justice Department's criminal division.

ICAP called its former staff "rotten apples" and said it would improve systems to ensure compliance with regulations.

A central cog in the global financial system, the London interbank offered rate (Libor) is used as a benchmark against which hundreds of trillions of dollars worth of products, from complex derivatives to personal mortgages, are priced worldwide.

Based on a survey of what banks would charge each other for loans, traders colluded on answers that could nudge the reported rates by amounts that were tiny but translated into big profits.   Continued...

 
People walk past an ICAP office in the City of London September 25, 2013. REUTERS/Toby Melville