By Max Colchester and Jenny Strasburg
A U.K. regulator Thursday fined and banned two former senior
executives at broker R.P. Martin Holdings for compliance failings
in relation to rate-rigging.
The Financial Conduct Authority fined Martin Brokers' former
chief executive, David Caplin, GBP210,000 ($317,824) and former
compliance officer, Jeremy Kraft, GBP105,000. Both were banned from
holding senior roles in the finance industry. The fines come eight
months after the brokerage was fined for allegedly helping a trader
rig an interbank lending benchmark.
"The FCA has found that Caplin and Kraft's failings contributed
to a culture at Martins that permitted...manipulation to take place
and enabled the misconduct to continue undetected over a prolonged
period," the regulator said. The fine marks the first publicly
disclosed penalty issued by the U.K. regulator against individuals
in relation to rate-rigging.
The FCA said between 2005 and 2011 Mr. Caplin failed to put in
place proper compliance controls to prevent brokers making or
receiving "corrupt inducements." Mr. Kraft didn't challenge Mr.
Caplin on compliance issues, in particular on the role of
compliance staff in monitoring the front office, the FCA said. In
May last year, the FCA fined Martins GBP630,000 for misconduct
related to attempted manipulation of the London interbank offered
rate.
Three Martins brokers allegedly helped a UBS AG trader to
manipulate the Japanese Yen Libor rate. The trader rewarded Martins
by placing a series of risk-free trades through the brokers,
helping boost commission payments. The eventual FCA fine would have
been significantly larger, but the broker was unable to pay. Mr.
Caplin left Martin Brokers in 2013.
During the time in question Mr. Caplin was chief executive
officer of RP Martin Holdings Ltd., owner of interdealer broker
R.P. Martin. Mr. Kraft also was an executive of the firm, according
to regulatory filings. R.P. Martin suspended Mr. Caplin in 2013 in
connection with Libor inquiries.
London-based R.P. Martin Holdings last year was fined $2.3
million by regulators in the U.S. and U.K. over accusations of
bribes related to Libor manipulation. R.P. Martin was originally
fined more than $2.3 million, but the larger figure was discounted
based on the firm's statements that it couldn't afford it. The firm
said its senior management had cooperated with U.K. and U.S.
regulators and accepted the $2.3 million fine.
At the end of 2014, R.P. Martin agreed to sell its primary
assets to a rival interdealer broker.
Write to Max Colchester at max.colchester@wsj.com and Jenny
Strasburg at jenny.strasburg@wsj.com