Not the Onion – Libor Market: Regulators Misses Deadline on Individual Fines – ValueWalk Premium

Not the Onion – Libor Market: Regulators Misses Deadline on Individual Fines

Opsss. U.K. regulators have apparently missed a deadline to fine individuals in a big bank for their role in the Libor market manipulation scandal.

While regulators seem to have no issue remembering legal deadlines for hedge fund insider trading cases – often considered among market structure experts not to be as serious as market manipulation cases – for some reason when individual bank executives generally break the law or dis-guard regulations those pesky deadlines and burdensome paperwork gets in the way of individual punishment.

Not the Onion - Libor Market: Regulators Misses Deadline on Individual Fines

Libor market manipulation: FCA acknowledges it missed a deadline

Such appeared to be the case in the U.K. recently. According to a Bloomberg report, U.K. Financial Conduct Authority acknowledged it missed a deadline to impose an individual civil penalty on one individual involved in admitted market manipulation. At least two additional traders who face additional penalties are challenging such penalties, claiming the FCA missed their deadline, according to unnamed sources cited in the report.

Sources with knowledge of the probe, presumably associated with legal or regulatory sources, oddly provided the press the names of those involved. Bloomberg reported that warning notices were sent to former Deutsche Bank AG (NYSE:DB) (ETR:DBK) traders Christian Bittar and Guillaume Adolph, and ex-Royal Bank of Scotland Group PLC (NYSE:RBS) (LON:RBS) trader Andrew Hamilton. The warning notice informs them of potential fines, but they have not been accused of criminal wrongdoing.

“After such a drawn-out investigation it will be disheartening for the FCA if they have nothing to show for it in some cases,” Richard Burger, a lawyer at RPC LLP in London who used to work for the regulator, was quoted as saying in the report.

Libor market manipulation: FCA did not start its formal investigation until 2010

The issue in the case appears to be when the FCA was first made aware of the allegations against the individual traders. U.S. investigators told the U.K. regulator it was looking into allegations into benchmark interest rates in 2008, but the FCA did not start its formal investigation until 2010.

Since 2012, seven firms were fined 532 million pounds, or nearly $839 million, for manipulating the Libor interest rate market and profiting from it.  Financial reformers chafe when, like the activity surrounding the 2008 derivatives crisis that generated massive fines against the corporation and its shareholders, certain individuals involved in acts that damaged market structure have kept their bonuses and jobs. In fact, in the case of the 2008 crisis whistleblowers who reported criminal activity are among the only individuals punished.

That said, the U.K. Serious Fraud Office, the organization leading the British criminal probe, has charged 13 traders in relation to Libor manipulation and more charges planned, the report said, citing unnamed sources. The first such trial is scheduled to begin in May of 2015.


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