Britain’s ICAP PLC has agreed to pay about US$87 million to settle US and UK charges of manipulating a key global interest rate, the fourth financial firm sanctioned in the international rate-rigging scandal.
The US Commodity Futures Trading Commission on Wednesday said that ICAP, the world’s largest broker of trades between banks, engaged in rigging of the London interbank offered rate, or LIBOR, from October 2006 to January 2011.
Separately, US prosecutors filed criminal charges in Manhattan on Wednesday against three former ICAP brokers, saying they hurt the integrity of the financial markets by taking part in the scheme.
Brokers Darrell Read, of New Zealand, and Daniel Wilkinson and Colin Goodman of Britain were each charged with conspiracy to commit wire fraud and two counts of wire fraud. They face a maximum 30 years in prison for each of three counts.
A British banking trade group sets the LIBOR every morning after international banks submit estimates of what it costs them to borrow. The rate affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.
Barclays Bank and Royal Bank of Scotland, as well as UBS, Switzerland’s biggest bank, have paid a total US$2.5 billion to settle charges of rigging the LIBOR.
Other banks, including Citigroup Inc and JPMorgan Chase & Co, are being investigated.
Britain’s Financial Conduct Authority fined ICAP US$22.4 million, while the US commission levied a US$65 million penalty against the firm.
ICAP also agreed to take steps to ensure the accuracy of the interest rate information it submits.
London-based ICAP said in a statement it has been cooperating with a criminal investigation by the US Department of Justice.
“We deeply regret and strongly condemn the inexcusable actions of the brokers who sought to assist certain bank traders in their efforts to manipulate [LIBOR],” ICAP chief executive officer Michael Spencer said.
The misconduct at ICAP involved a large number of brokers, including two managers, the regulators said.
One broker, known as “Lord LIBOR” or “Mr LIBOR,” engaged in manipulation to aid a favored client of ICAP who was a trader at UBS in Japan, according to the US commission.
UBS made at least 330 written requests to ICAP brokers for inaccurate interest-rate information, the regulators added.
Weak supervision by ICAP allowed the misconduct to continue for more than four years, they said.
“Any market participant who seeks to undermine the integrity of a global benchmark interest rate must be held accountable,” commission Enforcement Director David Meister said in a statement.
The process of setting the LIBOR has come under scrutiny since Barclays admitted in June last year that it had submitted false information to keep the rate low. Barclays agreed to pay a US$453 million fine, and its chief executive and chairman both resigned soon afterward.
Several US cities and municipal agencies have filed lawsuits against some of the banks that set the LIBOR rate seeking damages for losses suffered as a result of an artificially low rate.