The FCA Bars Ex-Royal Bank of Scotland Trader Over Libor Rigging

U.K.’s Financial Conduct Authority is barring Paul White, an ex-Royal Bank of Scotland (RBS) trader, for misconduct involving the rigging of the London interbank offered rate. The FCA said that White behaved with recknlessness and was not in integrity when he would submit information about Libor related to the Swiss frank and the Japanese yen.

According to the British regulator, from 5/07 to 11/10, White improperly considered requests that came from derivatives traders at two banks when issuing Libor submissions. If any of the information he turned in wasn’t been accurate, this could have changed the rate for Libor in a manner benefitting White and others. In a news release, the FCA said that White had a duty to make sure his submissions were correct and not influenced by his own financial interests or the interests of others.

The regulator provided a transcript that included electronic messages between a broker at another bank and White. The messages indicated that they worked together to rig Libor.

White was the recipient of 68 communications from RBS derivatives traders for Libor submissions. In the exchanges, said the FCA, the traders sought to help their trading positions. There was also a Swiss franc trader that purportedly made such requests verbally for twenty months. White also received requests from a yen derivatives trader who did not work at the firm.

The FCA’s final notice states that White claims that although he took into account trading positions when issuing Libor submissions, his entries were always “correct” and within a range that was acceptable according Libor’s definition. White claimed that he engaged in seemingly improper communications only to “appease.” FCA, however, rejects White’s account of what happened. Yet despite imposing an industry bar against him, the regulator waived what could have been a $354,000 fine because White is undergoing financial difficulties.

To date, the UK regulator has barred three other people for rigging Libor, including ex-Deutsche Bank (DB) trader Michael Curtler and ex-Rabobank traders Paul Robson and Lee Stewart. FCA, along with other regulators, have fined some of the largest banks in the world billions of dollars over the Libor rigging scandal. RBS, Deutsch Bank, UBS (UBS) and Barclays (BARC) are among those that have paid.

This month, the criminal trial against a number of ex-Barclays employees charged with rigging Libor is underway. This is the third trial in the UK over Libor manipulation. Prosecutors content that Barclays derivatives traders in London and New York worked with rate submitters in London to attempt to rig Libor. The reason, claims the Serious Fraud Office, was to raise trader profits made through derivatives contracts. Prosecutors claim that from 6/05 to 9/07 men colluded with others to rig Libor submissions related to the US dollar.

The defendants include ex-Barclays traders Ryan Michael Reich, Stylianos Contogoulas, Alex Pabon, and Jay Vijay Merchant, as well as ex-Barclays rate submitter Jonathan James Matthew. All of them deny wrongdoing and they entered a not guilty plea to the conspiracy to defraud charge. Barclays has paid $450M in penalties to resolve Libor rigging allegations.

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FCA bans former RBS trader over Libor misconduct, Reuters, April 12, 2016

Trial Opens for Ex-Barclays Employees in Libor Case
, New York Times, April 5, 2016