London-based interdealer broker RP Martin Holdings Ltd was fined by $2.3 million by both US and UK regulators for their acceptance of over $400,000 in illegal payments to aid the manipulation of benchmark interest rates.
In a statement released today, UK Financial Conduct Authority stated that the brokerage firm had colluded with a UBS AG trader to manipulate the London interbank offered rate linked to the Japanese yen. The FCA imposed a 630,000 pounds fine or $1.1 million, while the US Commodity Futures Trading Commission levied $1.2 million. Bloomberg noted that the fine was the smallest levied in the US and UK probes, but the second one RP Martin has faced over the supposed Libor-rigging.
The CFTC said that the UBS trader and the RP Martin brokers tried to conceal the wash trades by opting to discuss their collaboration over the phone as oppose to chatting via instant message. Moreover, the regulator said that they attempted to hide the fictitious trades by staggering them in the market to avoid raising questions about it.
The news agency said authorities across the globe has been investigating how over a dozen firms, including some of the biggest banks in the world, had conspired to rig benchmark interest rates in order to profit on their own derivative trades. In December, global fines for rate-rigging has already reached around $6 billion, while antitrust regulators in the European Union had levied a record 1.7 billion euros ($2.3 billion) in fines.
FCA's head of enforcement Tracey McDermott said in a statement, "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."
RP Martin said in an emailed statement to Bloomberg regarding the fines, "RP Martin's new senior management team cooperated fully with the FCA and CFTC in their investigation and entirely respect the fine and sanctions imposed. Over the last 12 months the board comprehensively restructured the firm's governance, systems and controls and compliance procedures."
