CFTC Orders Interdealer Broker to Pay Penalty for Manipulation of Yen LIBOR
The CFTC issued an order against an interdealer broker - RP Martin Holdings Limited and its subsidiary Martin Brokers (UK) Limited (collectively, "RP Martin") - filing and settling charges of manipulation, attempted manipulation, false reporting, and aiding and abetting derivatives traders' acts of manipulation and attempted manipulation of Yen LIBOR.
According to the CFTC Order, brokers on the Yen desk of RP Martin knowingly disseminated false and misleading information concerning Yen borrowing rates to market participants. This action was allegedly done in an attempt to manipulate, at times successfully, the official fixing of the daily Yen LIBOR. The Order states that RP Martin brokers primarily did so to aid and abet a senior Yen derivatives trader employed at other firms that had principal positions.
The Order found that this conduct occurred in part because RP Martin's supervision, internal controls, and policies and procedures were inadequate. For example, the Order states that RP Martin never audited the Yen desk and failed to question the wash trading activity, even after an RP Martin manager who monitored back-office brokerage activity raised the issue with management.
With this Order, the CFTC has now brought a total of 6 actions and imposed penalties of $1.766 billion on entities for manipulative conduct involving LIBOR and other benchmark interest rates.
See: Order against RP Martin; CFTC Press Release and Examples of Misconduct. Related news: FDIC Files Suit against 16 Banks over Alleged LIBOR Rigging (March 17, 2014); CFTC Issues Order against Rabobank for LIBOR Manipulation (with Lofchie Comment) (October 29, 2013); CFTC Charges ICAP Europe Limited with Manipulation of Yen LIBOR (September 25, 2013); CFTC Chairman Gensler Remarks on Benchmark Interest Rates (April 22, 2013); RBS Fined £87.5 Million by FSA for LIBOR Failings (February 7, 2013); Barclays Hit with Substantial Fines for LIBOR and EURIBOR Misconduct (July 3, 2012).