Ex-brokers charged over Libor scandal

Britain’s fraud prosecutor yesterday charged two former brokers at interdealer broker RP Martin with conspiracy to defraud, stepping up its investigation into the rigging of Libor benchmark interest rates.

The Serious Fraud Office (SFO) said it had charged Terry Farr and James Gilmour, seven months after arresting them.

They are the first brokers to be charged in the Libor scandal. The two were arrested a fortnight before Christmas along with former UBS and Citigroup trader Tom Hayes, who was last month charged with eight counts of conspiracy to defraud as the SFO laid the groundwork for what could be the first Libor trial.

A central cog in the world financial system, the London interbank offered rate (Libor) is used as a reference for some $550tn (€421tn) in contracts ranging from complex derivatives to everyday credit card bills.

Trust in the benchmark was shaken by revelations last year that traders had routinely manipulated it, prompting a series of investigations by regulators and other authorities.

Britain’s Barclays and Royal Bank of Scotland and Switzerland’s UBS have been fined by US and UK authorities for manipulating Libor, and more banks and individuals are under investigation.

Inter-dealer brokers were drawn further into the probe when UBS admitted in its settlement in December its traders paid bribes to brokers in return for their help rigging interest rates. The payments to unnamed brokers ran at £15,000 (€17,330) per quarter.

Farr, 41, and Gilmour, 48, will appear before Westminster Magistrates’ Court at a later date, the SFO said.

The US owner of the New York Stock Exchange announced last week it would take over the running of Libor in a move that Britain’s financial regulator said would restore its integrity.

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