REFILE-UPDATE 1-UK watchdog issues warning notice to Libor trader

Thu Feb 27, 2014 7:18am EST

LONDON Feb 27 (Reuters) - Britain's financial regulator has issued its third warning notice to an individual trader for "significant failings" over nearly two years, as part of an investigation into manipulation of benchmark interest rates.

The Financial Conduct Authority (FCA), which has already sent two warning notices to other traders, said the unidentified trader made Libor rate submissions that took into account the person's own trading book positions, tried to influence other bank rate submissions and colluded with a trader at another bank to submit quotes at his request.

The warning, issued in January but published on Thursday, related to allegations that traders rigged the London Interbank Offered Rate (Libor), a benchmark in the global financial system used to help price about $450 trillion of financial products from student loans to complex derivatives.

The individual will now be able to contest allegations in the notice and can take the matter to the independent Upper Tribunal for resolution, if necessary.

Individuals are expected to fight harder than some of their employers against any settlement with the regulator, because they risk not only losing their jobs, but also the possibility of paying hefty fines.

The regulator has dozens of individuals in scope, lawyers say, and is keen to issue prompt warning notices to ensure cases are brought within a legal three-year window from when it became aware of misconduct.

The sprawling Libor investigation, which stretches from North America to Asia and has shaken public faith in the financial industry, has so far led to fines of $6 billion imposed on 10 banks and brokerages and charges against 13 individuals.

Rates such as Libor are based on a survey of what banks would charge each other for loans. But banks have been found to have rigged them to show that either they were not in financial difficulty during the credit crisis or to improve their own trading positions.

Earlier this month, the FCA published a warning to a submitter of benchmark interest rates for failings over more than two years and another to a manager at a bank for failings over more than three years.

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