LONDON Britain's financial regulator has issued a warning notice to another two traders for "significant failings" over a period of around two years, as part of an investigation into manipulation of benchmark interest rates.
The Financial Conduct Authority (FCA), which has already sent warning notices to five other traders, did not name the latest two. But it said one was a manager and trader at a bank, who was personally aware of and condoned other traders making requests to manipulate benchmark rate submissions.
The individual facilitated others' attempts to manipulate benchmark submissions and was aware of the inadequacy of the bank's systems, controls or policies governing the procedure for making interest rate benchmark submissions, but took no steps to address this, the FCA said in a statement on Thursday.
The warnings relate to allegations that traders rigged the London Interbank Offered Rate (Libor), a benchmark in the global financial system used to help to price about $450 trillion of financial products from student loans to complex derivatives.
The sprawling investigation into Libor and related interest rate benchmarks, which stretches from North America to Asia and has shaken public faith in the financial industry, has so far led to fines of $6 billion on 10 banks and brokerages and criminal charges against 13 individuals.
Rates such as Libor are based on a survey of what banks would charge each other for loans. But traders at banks have been found to have manipulated them to show that either the banks were not in financial difficulty during the financial crisis or to improve their own trading positions.
The watchdog has only recently begun publishing warning notices to increase transparency of its enforcement actions. The notices effectively mark the start of possible regulatory action that could lead to a so-called "decision notice".
If the FCA issues a decision notice, individuals will be able to contest allegations by taking the matter to the independent Upper Tribunal for resolution.
Individuals targeted by the watchdog risk losing not only their jobs, but also face the possibility of hefty fines and bans from working in the financial industry.
The regulator has dozens of individuals in scope, lawyers say, and is keen to issue prompt warning notices to ensure cases are brought within a legal three-year window from when the watchdog becomes aware of any misconduct.
(Reporting by Kirstin Ridley. Editing by Jane Merriman)
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