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Brokers Charged in Libor Investigation

Source: WSJ

Posted on 15 Jul 2013 by Neilson

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LIBORBritish fraud prosecutors on Monday filed criminal fraud charges against two former London brokers, marking an expansion of the investigation into manipulation of the London interbank offered rate, or Libor.

The U.K.'s Serious Fraud Office said it charged Terry Farr and James Gilmour, who both formerly worked for interdealer broker R.P. Martin Holdings Ltd., with "conspiracy to defraud." The charges come after the agency last month filed similar charges against former UBS AG and Citigroup Inc. trader Tom Hayes. All three men were arrested in the U.K. last December.

Lawyers for Mr. Farr, 41 years old, and Mr. Gilmour, 48, couldn't immediately be reached for comment. Mr. Hayes hasn't entered a plea.

The Serious Fraud Office didn't detail the charges against Messrs. Farr and Gilmour, beyond saying that Mr. Gilmour was charged with one count of conspiracy to defraud and Mr. Farr is charged with two counts. The men, charged at a London police station Monday morning, are due to appear in a London court at a later date, the SFO said.

When reaching settlements with UBS and Royal Bank of Scotland Group PLC, U.S. and British investigators said that traders at those banks worked with multiple interdealer brokers in their efforts to manipulate Libor and other benchmarks, which underpin interest rates on trillions of dollars of financial contracts around the world. In return for their help, the brokers were sometimes rewarded with cash payments or so-called "wash trades," which are offsetting transactions simply designed to drum up commission payments for the brokers who handle them.

People familiar with the matter have identified R.P. Martin as one of the firms whose brokers were involved in the Libor-manipulation efforts.

The latest criminal charges indicate that British prosecutors, which launched their investigation last July, have leapfrogged ahead of the U.S., which has been conducting its investigation since 2008. The Justice Department last December filed criminal charges against Mr. Hayes and another former UBS trader. Prosecutors in both countries have said they are continuing to investigate.