The FCA has fined and banned two former senior executives of interdealer broker Martin Brokers (UK) Limited for compliance and cultural failings at the firm.
This follows previous enforcement action against Martins; in 2014 the Financial Conduct Authority fined Martins £630,000 for misconduct relating to the London Interbank Offered Rate (LIBOR).
Former Martin Brokers chief executive David Caplin has been fined £210,000 in addition to a ban from holding a significant influence function at an FCA authorised firm because of a lack of competence in his CEO and director role.
And former compliance officer Jeremy Kraft has been fined £105,000. He has also been banned from holding a position of significant influence in an FCA authorised firm because of a lack of competence as an FCA approved compliance officer.
The FCA has found that Caplin and Kraft’s failings contributed to a culture at Martins that permitted LIBOR manipulation to take place and enabled the misconduct to continue undetected over a prolonged period.
The two directors failed to recognise the risk of this culture developing and failed to take reasonable steps to prevent it.
Georgina Philippou, acting director of enforcement and market oversight at the FCA, said: “Mr Kraft and Mr Caplin were responsible for setting the right culture at Martins and ensuring that the firm’s risk management systems and controls were adequate to oversee its broking activities. They failed to do this.
"Proper systems and controls were non-existent and there was a culture at Martins where revenue came first and compliance was seen as unimportant rather than as an integral part of the running of the firm.
“Both individuals also ignored obvious risks such as the risk that brokers would give or accept inducements. This risk did in fact crystalise when brokers at Martins were induced to assist in LIBOR manipulation in exchange for corrupt brokerage payments. Consequently, the integrity of the financial markets was compromised.”
Caplin and Kraft agreed to settle at an early stage of the investigation and therefore qualified for a 30 per cent discount under the FCA’s settlement discount scheme. Without the discount, the fines would have been £300,000 and £150,000 respectively.