Inter-dealer broker firm Martin Brokers (UK) has been fined £1.3m by UK and US regulators over Libor rigging.
The company has been fined £630,000 by the FCA and $1.2m (£716,300) by the US Commodity Futures Trading Commission.
Martins would have been fined £3.6m by the FCA but the regulator says the company would not have been able to afford this penalty in addition to the other fines it faces in relation to Libor.
The company is the sixth firm to be fined by the regulator over Libor.
Between January 2007 and December 2010, Martins colluded with a trader at UBS to manipulate the Japanese Yen Libor rates for his benefit. The misconduct involved Martins deliberately sending incorrect or misleading Libor submission levels by:
- communicating skewed suggestions to some panel banks as to where they believed the published Japanese Yen Libor rate would set for a particular day (known as “run-throughs”);
- creating false or “spoof” orders; and
- requesting certain panel banks to make specific Japanese Yen Libor submissions.
The UBS trader made corrupt brokerage payments to reward Martins for their efforts to manipulate the LIBOR submissions of panel banks through the use of fake trades known as “wash trades”.
Martins’ misconduct involved several brokers and occurred over a number of years. Two brokers, including one manager, were central to the collusion, although at least three other individuals were also involved.
The FCA says Martins’ risk management systems and controls were inadequate and there was no effective oversight of the brokers involved.
The regulator says there was a poor compliance culture within Martins which focused on revenue at the expense of regulatory requirements.
FCA director of enforcement and financial crime Tracey McDermott says: “Inter-dealer brokers are expected to act as trusted intermediaries and are key conduits of market information. Martins abused this position of trust by providing false information to panel banks, with no regard for the integrity of the market. This is unacceptable behaviour from any market participant.
“The culture at Martins was that profit came first. Compliance was seen as a hindrance and the firm lacked the means to detect the “wash trades”. In this environment, broker misconduct was almost inevitable.”