Three ICAP Brokers Charged By UK Fraud Prosecutors

Three former brokers ICAP brokers are being charged by UK prosecutors with manipulating European interest rate markets, according to a report.

UK’s Serious Fraud Office (SFO) announced that it was charging the three brokers – Daniel Wilkinson, 47 years old, Darrell Read, 49, and Colin Goodman, 52 – along with ten other traders.  The brokers are charged with manipulating the LIBOR interest rate market to improve their trading profits.  LIBOR is used by many banks to set interest rates used in home mortgages. The trio has also been charged by the US Justice Department with similar fraud related issues, but their lawyers prefer them facing the lighter charges in the UK, according to the report.

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Large banks settle charges

Last September ICAP, among the largest institutional interdealer brokers in England, settled charges against the company in the issue and paid a $87 million penalty, which was followed by the firm CEO apologizing for their conduct.  UBS and Barclays had previously settled charges over Libor issues.  As previously reported in ValueWalk, UBS acknowledged that its employees were involved in manipulating Libor as well as other benchmark rates, including euro interbank offered rate (Euribor) and Tokyo interbank offered rate (Tibor). Together, these benchmarks form the basis for interest rates on over $350 trillion dollars worth of financial securities around the world.

“This goes much, much higher than me”

Reports have indicated a rift between UK SFO and the US Department of Justice exists over jurisdictional issues in the case. In late 2012, after the US DoJ charged former UBS and Citigroup trader Tom Hayes, a man they believed to be the ringleader in the Libor case, the SFO charged him, preventing his extradition.  After pleading guilty to the UK charges, he was quoted as saying “this goes much, much higher than me.”

The DoJ and SFO have glossed over any potential disagreement.

“We have very good relations with the DOJ and have regular contact with them about our mutual intentions in this investigation,” Nilima Fox, an SFO spokeswoman, told WSJ.  Not to be outdone, US Justice Department spokesman Peter Carr was quoted as saying, “We have a good, productive relationship with the U.K. Serious Fraud Office and other partners throughout the globe.”

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com