British fraud prosecutors began criminal proceedings against three former brokers from ICAP PLC, the world’s top interdealer broker, as the UK side of a global investigation into alleged rigging of crucial benchmark interest rates cranked up.
The Serious Fraud Office (SFO) said on Friday it was charging former ICAP derivatives broker Darrell Paul Read, his supervisor Daniel Martin Wilkinson, and Colin John Goodman, a cash broker in ICAP’s London office, in connection with the manipulation of the London interbank offered rate, or LIBOR.
“It is alleged they conspired to defraud between 8 August 2006 and 7 September 2010,” the SFO said in a statement.
The three are to appear at Westminster Magistrates’ Court on April 15, when the charges will be read out, the SFO added.
The three men, who have already been charged by US prosecutors, bring to nine the number of people charged in Britain over the manipulation of LIBOR, a central cog in the global financial system.
Thirteen men have been charged globally over the scam to date — 10 for alleged Japanese yen LIBOR manipulation and three for alleged US dollar LIBOR manipulation.
The inquiry into LIBOR and a related EURIBOR-rigging inquiry, which stretches from North America to Asia, has also seen US and European regulators fine 10 banks and brokerages a total of US$6 billion to date.
ICAP, which in September last year settled regulatory investigations into allegations of manipulation of yen LIBOR, declined to comment.
Based on a survey of what banks would charge each other for loans, traders are alleged to have colluded on answers that could nudge the reported rates by amounts that were tiny but translated into big profits.
The SFO has already charged six other men as part of its LIBOR investigation, including Tom Hayes, a former yen derivatives trader at UBS and Citigroup, who pleaded not guilty in a London court in December.
Hayes, who has also been charged in a probe by US prosecutors, is scheduled to stand trial in London in January next year on eight charges of conspiring with staff from at least 10 banks and brokerages to manipulate yen LIBOR rates between 2006 and 2010.
Terry Farr and James Gilmour, — formerly brokers with RP Martin Holdings Ltd — have also been charged and pleaded not guilty to similar fraud-related offenses in Britain. Their trial has been scheduled for September 2015, in part to allow the SFO time to bring charges against further alleged co-conspirators.
Although the sprawling LIBOR investigation has generated fewer headlines since authorities announced parallel inquiries into other benchmarks, such as those in foreign exchange and swaps markets, the long-awaited LIBOR charges are a reminder of the insidious nature of the alleged wrongdoing.
LIBOR is the primary benchmark for short-term interest rates globally and is used as a reference rate for mortgages, credit cards, student loans and other consumer lending products that the Swiss-based Bank of International Settlements has estimated to be worth around US$450 trillion.
ICAP is the world’s largest interdealer broker, an industry designed to match buyers and sellers of bonds, currencies and swaps without bias.
However, when the brokerage last September became one of 10 institutions fined by US and European authorities — the penalties now total around US$6 billion — regulators laid bare a world in which, they alleged, brokers deliberately infected financial markets with false information to benefit their leading client.