Britain charges former ICAP brokers over Libor rigging

LONDON Fri Mar 28, 2014 11:47am EDT

LONDON Mar 28 (Reuters) - British fraud prosecutors began criminal proceedings against three former brokers from ICAP , the world's top interdealer broker, as the UK side of a global investigation into alleged rigging of crucial benchmark interest rates cranked up.

The Serious Fraud Office (SFO) said on Friday it was charging former ICAP derivatives broker Darrell Paul Read, his supervisor Daniel Martin Wilkinson and Colin John Goodman, a cash broker in ICAP's London office, in connection with the manipulation of the London Interbank Offered Rate or Libor.

"It is alleged they conspired to defraud between 8 August 2006 and 7 September 2010," the SFO said in a statement.

The three will appear at Westminster Magistrates' Court on April 15, when the charges will be read out, the SFO added.

ICAP declined to comment.

The three men, who have already been charged by U.S. prosecutors, bring to nine the number of people charged in Britain over the manipulation of Libor, a central cog in the global financial system.

Thirteen men have been charged globally over the scam to date - 10 for alleged yen Libor manipulation and three for alleged dollar Libor manipulation. The inquiry into Libor and a related Euribor-rigging inquiry, which stretches from North America to Asia, has also seen U.S. and European regulators fine 10 banks and brokerages a total of $6 billion to date.

Based on a survey of what banks would charge each other for loans, traders colluded on answers that could nudge the reported rates by amounts that were tiny but translated into big profits.

The SFO has already charged six other men as part of its Libor investigation, including Tom Hayes, a former yen derivatives trader at UBS and Citigroup, who pleaded not guilty in a London court in December.

Hayes, who has also been charged by U.S. prosecutors, is due to stand trial in London in January 2015 on eight charges of conspiring with staff from at least 10 banks and brokerages to manipulate yen Libor rates between 2006 and 2010.

Terry Farr and James Gilmour, two brokers from RP Martin, have also been charged and pleaded not guilty to similar fraud-related offences in Britain. Their trial has been scheduled for September 2015, in part to allow the SFO time to bring charges against further alleged co-conspirators.

Although the sprawling Libor investigation has generated fewer headlines since authorities announced parallel inquiries into other benchmarks, such as those in foreign exchange and swaps markets, the long-awaited Libor charges are a reminder of the insidious nature of the alleged wrongdoing.

Libor is the primary benchmark for short-term interest rates globally and is used as a reference rate for mortgages, credit cards, student loans and other consumer lending products that the Swiss-based Bank of International Settlements (BIS) has estimated to be worth around $450 trillion.

ICAP is the world's largest interdealer broker, an industry designed to match buyers and sellers of bonds, currencies and swaps without bias.

But when the brokerage last September became one of 10 institutions fined by U.S. and European authorities - the penalties now total around $6 billion - regulators laid bare a world in which, they alleged, brokers deliberately infected markets with false information to benefit their top client.

ICAP also remains under investigation by the European Union antitrust regulator over the alleged rate-rigging scam.

Regulators are also examining whistleblower allegations that other benchmarks, such as those governing foreign exchange, have been manipulated. (Additional reporting by Huw Jones; editing by Tom Pfeiffer)