Former brokers in UK court on Libor fraud charges

Brokers are among the first to face criminal action in connection with Libor rate rigging scandal

James Gilmour (right) leaves Westminster Magistrates Court in central London. Photograph: Paul Hackett/Reuters

James Gilmour (right) leaves Westminster Magistrates Court in central London. Photograph: Paul Hackett/Reuters

 

Two former brokers, who appeared in court today on fraud charges, conspired with employees at UBS, HSBC, Rabobank, Citi and Tullett Prebon to manipulate Libor rates, UK prosecutors alleged in court documents.

Terry Farr (41) and 48-year old James Gilmour, former staff at UK interbroker dealer RP Martin, are accused of conspiracy to defraud along with former Citi and UBS trader Tom Hayes.

The two men, arrested last December alongside Mr Hayes, are the first brokers to face criminal action in connection with a global investigation into the Libor interest rate rigging scandal.

A central cog in the world financial system, the London interbank offered rate (Libor) is used as a price reference for hundreds of trillions of dollars worth of contracts, ranging from complex derivatives to everyday credit card bills.

The scandal has sparked public and political outrage and laid bare the failure of authorities and bank bosses to spot the manipulation.

So far, regulators have fined Britain’s Barclays, Switzerland’s UBS and Royal Bank of Scotland a total of $2.6 billion and prosecutors have charged four men.

Mr Hayes, Mr Gilmour and Mr Farr are the first to face court. The fourth suspect, Roger Darin, was charged by US prosecutors last December. He is currently in Switzerland.

The case against the two men, who both live in the southeastern English county of Essex, will increase scrutiny of the role played in the scandal by interdealer brokers, who act as middlemen between the buyers and sellers of financial securities such as bonds, currencies or interest rate swaps.

Mr Farr and Mr Gilmour sat in the dock in London’s Westminster Magistrates Court and spoke only to confirm their names and addresses and their bail conditions.

The two were granted bail until July 30th, when their case will be transferred for a hearing to the higher Southwark Crown Court. They were told not to contact each other or Mr Hayes, and they gave no indication of how they would plead.

Citi and UBS declined to comment. HSBC, Tullett Prebon and Rabobank did not immediately respond to requests for comment.

Reuters