The UK Financial Conduct Authority (FCA) has banned a former RP Martin employee from working in the financial industry for submitting false Libor rates at the request of banks traders.
Terry Farr, who was a derivatives trader in Japanese Yen denominated instruments at the City broker, was found to have routinely helped UBS Libor submitters to change the rates they submitted in order to benefit their positions, the FCA said.
In return, Mr. Farr had recklessly entered into wash trades – risk-free deals that effectively cancel each other out – which had no legitimate commercial rationale. The purpose of these trades was to reward Farr who already earned over $300,0000 for Martins from UBS and RBS, which increased the bonus pool available to him and his colleagues.
The misconduct took place between September 2008 and August 2009.
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The FCS’s regulator decisions committee found that Farr was aware that he is rigging Libor submissions, the mechanism used to set interest rates, with the aim of benefiting RBS’ trading positions. It added “Mr Farr’s motivation for arranging the wash trades was profit and his own personal financial gain. As a consequence of the wash trades, Martins received unwarranted brokerage of £258,151.09.”
Terry Farr found not guilty
Back in 2016, however, a London jury acquitted Terry Farr and five former brokers of trying to rig the JPY benchmark interest rate, which was a major blow to a yearslong investigation into the Libor rate manipulation.
The other brokers, whose nicknames included “Lord Libor” and “Big Nose,” worked at ICAP Brokers and Tullett Prebon, which were merged later in 2016 under TP ICAP to form the world’s largest interdealer broker. In 2017, the new entity was partially cleared by the Luxembourg-based General Court from allegations it plotted with a cartel in the yen swaps markets to rig Libor.
Global regulators, including FCA and its U.S. and Swiss counterparts, have fined banks and brokers around $9.0 billion and charged about 30 people in a global inquiry into how banks set rates such as Libor, which determine the rates on trillions of loans and financial contracts globally.