Former brokers in UK court on Libor fraud charges
Two former brokers, who appeared in court on Friday 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 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.
Hayes, Gilmour and Farr are the first to face court. The fourth suspect, Roger Darin, was charged by U.S. 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.
Farr, dressed in a dark suit and tie, and Gilmour, dressed in an open neck white shirt, 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 30, when their case will be transferred for a hearing at the higher Southwark Crown Court. They were told not to contact each other or Hayes, and they gave no indication of how they would plead.
Citi and UBS declined to comment. Tullett referred to a June 20 statement in which it said it was cooperating with UK authorities, and that it has not been informed that it or its brokers were under investigation. HSBC and Rabobank did not immediately respond to requests for comment.
According to court documents, Farr and Gilmour are alleged to have conspired with Hayes, who was then at UBS, and employees at the Swiss bank, Tullett, Rabobank, HSBC and others to defraud in dishonestly trying to influence the yen London interbank offered rate between August 2006 and December 2009.
Farr is also charged with conspiring with Hayes when the latter worked at Citi between December 2009 and September 2010.
British prosecutors have alleged in court that former trader Hayes conspired with staff from at least 10 financial firms, including brokers RP Martin, its much larger rivals ICAP and Tullett, and a string of banks, to rig rates.
For its part, UBS - which has paid the highest fine over the Libor scam to date, agreeing to a $1.5 billion penalty - admitted in December that its traders paid bribes to brokers in return for their help rigging interest rates.
(Additional reporting by Kirstin Ridley; Editing by Carmel Crimmins and David Cowell)