Financial Conduct Authority  

FCA bans former Deutsche trader

FCA bans former Deutsche trader

The Financial Conduct Authority (FCA) has fined and banned a former trader at Deutsche Bank for his role in manipulating the London Interbank Offered Rate (Libor).

Guillaume Adolph, who was a trader at Deutsche Bank focused on derivatives, has been fined £180,000 by the regulator and banned from having any role related to a regulated financial activity.

Mr Adolph was a trader in products denominated in Swiss Francs and the Yen.

For a period of time Mr Adolph was the main Yen Libor setter for Deutsche Bank.

The Libor rate matters to the real economy because it is the benchmark against which many loans and other financial products are set.

For example, a loan agreement may set the interest rate at 1 per cent above the prevailing Libor rate.

The Libor rate is the level of interest banks charge each other to borrow. 

The rate is calculated by central banks taking an average of the rate submitted by each bank for the transactions it has carried out that day.

Those accused of Libor rigging were alleged to have deliberately submitted an incorrect rate for the transactions carried out by their employer that day, for their own financial benefit.

The FCA said Mr Adolph had submitted Libor rates on behalf of his employer that were deliberately wrong, to benefit the positions he had personally taken in the market.

The regulator said: "The FCA has determined that he is not a fit and proper person to perform any regulated financial activity.

"On 21 January 2014, the FCA issued Mr Adolph with a warning notice, but proceedings were stayed due to the ongoing criminal investigation of the Serious Fraud Office into certain individuals who formerly worked at Deutsche Bank."

Back in October, Deutsche Bank agreed to pay $220m in a settlement with US states that resolved claims it manipulated benchmark interest rates, closing another chapter in the chequered US history of Germany's biggest lender.

The agreement added to the long list of penalties extracted by regulators around the world over the rigging of Libor, the rates that underpin hundreds of billions of dollars of loans and hundreds of trillions of derivatives.

Eric Schneiderman, the New York attorney-general, speaking on behalf of 45 states which joined the action, said: "We will not tolerate fraudulent, manipulative or collusive conduct that interferes with or undermines confidence in our financial markets.

"As a result of Deutsche Bank’s misconduct, government entities and charities were defrauded of funds that otherwise could have been used to benefit New Yorkers."

david.thorpe@ft.com