Top interdealer broker fined $87m over Libor

LONDON/WASHINGTON: US and British authorities on Wednesday fined ICAP Plc, the world’s biggest interdealer broker, $87 million and filed criminal charges against three former employees over the Libor interest rate rigging scandal.

The scandal, which has laid bare failings by regulators and bank bosses over several years, has triggered a sprawling global investigation that has already seen three banks fined a total of $2.6 billion, four other people charged, scores of institutions and traders interrogated and a spate of lawsuits launched.

The US Department of Justice charged former ICAP derivatives broker Darrell Read, his supervisor Daniel Wilkinson, and cash broker Colin Goodman with conspiracy to commit wire fraud and two counts of wire fraud — offences carrying sentences of up to 30 years.

Simultaneously, the US Commodity Futures Trading Commission and Britain’s Financial Conduct Authority ordered ICAP’s ICAP Europe Ltd unit to pay $65 million and £14 million ($22 million), respectively.

‘‘These three men are accused of repeatedly and deliberately spreading false information to banks and investors around the world in order to fraudulently move the market and help their client fleece his counterparties,’’ said Acting Assistant Attorney General Mythili Raman of the Justice Department’s crimi- nal division.

ICAP called its former staff rotten apples and said it would improve systems to ensure compliance with regulations.

A central cog in the global financial system, the London interbank offered rate (Libor) is used as a benchmark against which hundreds of trillions of dollars worth of products, from complex derivatives to personal mortgages, are priced worldwide.

Based on a survey of what banks would charge each other for loans, traders colluded on answers that could nudge the reported rates by amounts that were tiny but translated into big profits.

Even as ICAP settled the civil probes, the firm could still face criminal charges from the Justice Department, which is continuing its investigation.

Multiple other banks and individuals also face potential prosecution for Libor manipulation. ‘‘We have a lot more to look at here,’’ Raman said in an interview with Reuters.

ICAP, run by London businessman and former Conservative Party treasurer Michael Spencer, is the first interdealer broker sanctioned in the affair.

Firms such as ICAP match buyers and sellers of bonds, currencies and derivative financial instruments, including swaps.

‘‘ICAP and other interdealer brokers are expected to be honest middlemen,’’ David Meister, the CFTC’s enforcement director, said in a statement. ‘‘Here, certain ICAP brokers were anything but honest.’’