Financial News

  • 14 May 2014, 10:12

City Broker RP Martin Faces FCA Libor Fine

The Libor rate-rigging scandal will re-emerge this week when a City broking firm becomes the latest to be fined by City watchdogs over the affair.

Sky News has learnt that RP Martin, an interdealer broker, has agreed a settlement with the Financial Conduct Authority (FCA) for its role in the manipulation of crucial interbank borrowing rates.

An announcement is expected on Thursday.

Insiders said on Tuesday evening that the fine would be by far the smallest levied on any of the firms so far found culpable in the Libor-rigging conspiracy.

RP Martin's fine is expected to be confirmed as being less than 1m because a more appropriate penalty in the context of its offences would have left the firm unable to pay while remaining in business.

Under FCA rules, conduct-related penalties should be reduced if not doing so would jeopardise the affected firm's ability to continue doing business.

It was unclear what the precise size of the fine would have been if RP Martin had had greater financial resources, although it is also understood to have qualified for a discount under an FCA scheme aimed at encouraging co-operation in regulatory investigations.

It will be the sixth settlement involving the FCA since the summer of 2012.

RP Martin has been majority-owned by Gresham, a private equity firm, since it backed a 28m management buyout in 2005.

City sources say that Gresham has had numerous conversations about offloading its interest in RP Martin but that its ability to do so has been impaired by the ongoing Libor probe.

RP Martin is little-known outside the City although it sprang to broader prominence in the new year when one of its brokers - subsequently nicknamed by the tabloids as the Wolf of Shenfield - was wounded in a shooting.

The firm suspended its chief executive and another executive director last year and has since named Stephen Welch as the new head of the firm.

Two former RP Martin employees, Terry Farr and James Gilmour, were the first individuals to be charged as part of the Serious Fraud Office's investigation into Libor-rigging, with the probe ultimately expected to claim a substantial number of scalps.

RP Martin's settlement with regulators is understood to be restricted to the FCA, unlike those of most of the other firms which have been fined so far.

Barclays was the first institution to be punished, paying 290m in June 2012 in a deal which triggered the departure of Bob Diamond, its former chief executive.

Since then, Rabobank, Royal Bank of Scotland, UBS and Icap, the interdealer broker headed by the former Conservative Party treasurer Michael Spencer, have all been forced to pay substantial sums to regulators in London and New York.

European regulators have also weighed in, levying aggregate fines of more than 1bn last December on lenders including Deutsche Bank, JP Morgan and RBS.

Further legal action against those and other banks is likely to follow.

The FCA and RP Martin refused to comment on Tuesday.

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