Two former senior executives of interdealer broker Martin Brokers Ltd have been banned by the regulator and fined a combined £315,000 over “compliance and cultural failings” relating to the manipulation of the London interbank offered rate.
Former chief executive David Caplin was fined £210,000 and former compliance officer Jeremy Kraft was fined £105,000. Both have been banned from performing “significant influence functions at financial services firms”.
Both of the former senior executives agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount under the Financial Conduct Authority’s settlement discount scheme.
The FCA said that without the discount, the fines would have been £300,000 and £150,000 respectively.
The watchdog also said it found that Mr Caplin and Mr Kraft’s failings contributed to a culture at Martins that permitted Libor manipulation to take place and enabled the misconduct to continue undetected over a prolonged period.
The FCA said in a statement: “The two directors failed to recognise the risk of this culture developing and failed to take reasonable steps to prevent it.”
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “Proper systems and controls were non-existent and there was a culture at Martins where revenue came first and compliance was seen as unimportant.
“Both individuals also ignored obvious risks such as the risk that brokers would give or accept inducements. This risk did in fact crystalise when brokers at Martins were induced to assist in Libor manipulation in exchange for corrupt brokerage payments.”
Today’s news follows previous enforcement action against Martins in May 2014, when the FCA fined the broker £630,000 over its involvement in interest rate manipulation, after an original penalty of £3.6m was dramatically reduced.
The fine for the firm came as a result of a “significant cross-border investigation” and alongside a settlement of $1.2m (£720,000) ordered by the US Commodity Futures Trading Commission.
Martins agreed to settle at an early stage of the FCA investigation and therefore qualified for a 30 per cent discount under the regulator’s settlement discount scheme.
ruth.gillbe@ft.com
