Britain’s markets regulator issued the third notice in as many weeks that another individual is in its cross-hairs in its wide-ranging investigation into the manipulation of important interest rate benchmarks, including the London Interbank Offer Rate, or Libor.
On Thursday, the Financial Conduct Authority issued a warning against an unnamed individual at an unnamed bank, on allegations that the person colluded with another trader to in an attempt to influence interest rate benchmarks.
If that sounds vague, it is because the authority cannot name them or their firm, but it has to give a warning within three years of the start of an investigation.
The warning is similar to a Wells notice issued by the Securities and Exchange Commission and lays out, in very broad strokes, civil charges brought against the individual. The individual can enter settlement talks, or can contest the decision to the F.C.A.’s Regulatory Decisions Committee, a group that includes a judge and a panel of individuals with expertise in the area of finance under inquiry.
In early February, the authority used its newly minted authority to issue publicly similar warnings against two other individuals for the first time.
The latest charges come amid a continuing global investigation into various interest rate benchmarks. It is separate from another extensive inquiry examining the possible rigging of foreign exchange rates.
The F.C.A. has fined five banks â€" Rabobank, ICAP, UBS, Barclays and the Royal Bank of Scotland â€" 426 million pounds ($710 million) to settle allegations of manipulation of interest rate benchmarks. The fines free the authority to pursue cases against individuals at those firms. Other banks remain under investigation.
The Financial Conduct Authority started investigating firms for manipulating interest rate benchmarks at the end of 2008, but homed in on individuals starting in 2011-2012.
Other regulators have investigations under way. Last week, Britain’s Serious Fraud Office said it had begun criminal proceedings against three former Barclays employees suspected in the manipulation of Libor, which is one of the main rates used to determine the borrowing costs for trillions of dollars in loans, including many adjustable-rate mortgages in the United States.
Three people were already facing criminal charges in Britain. Last December, Tom Hayes, a former derivatives trader at UBS and Citigroup, and Terry J. Farr and James A. Gilmour, former traders at the brokerage firm RP Martin, pleaded not guilty in London. British prosecutors have said that they have identified 22 people as potential co-conspirators.
Both the interest rate investigation and the foreign exchange one are proving logistically challenging to the multiple regulators investigating multiple banks in far-reaching corners of the world. The Serious Fraud Office, for example, is working with the authority and the U.S. Department of Justice, which is also conducting investigations. How to divide up the cases has been the source of tension, though some agreement appears to be taking shape.
In Britain, if both the Financial Conduct Authority and the Serious Fraud Office are investigating the same people, the fraud office, which can file criminal proceedings, takes precedent. But since the authority faces a statute of limitations while the fraud office does not, the authority may end up issuing warnings while the fraud office pursues a case.
