So the Serious Fraud office has charged 13 people in relation to the London LIBOR rigging scandal.
The latest suspect is accused of manipulating 'the London interbank offered rate between Feb. 1, 2009 and Dec. 3, 2009', according to a statement on the SFO website. It does make you wonder why these cases take so long to come to trial, let alone for any individuals to have their day in court.
Complex language and innuendo were used by alleged market riggers, with names like 'The Cartel', 'The Bandits’ Club' and 'Sterling Lads'. Evidently the SFO has a team of people trawling thorough the contents or threads of such chat rooms, populated and used by many dealers at the same time. Herein lies the problem. You have to be crystal clear about who the tags refer to, and you have to be able to understand the deliberately opaque language they used.
Without going into specific examples, it’s worth making a few points about the role that new technology has inevitably played in these cases. In olden times everything was done by phone between dealers, or by open outcry where a floor broker would help to process your orders. There were physical paper trails, with time stamped tickets. With the advent of phone text messaging and instantaneous chat boxes, it became a lot easier to go 'off piste'. Setting up privileged permanent chat rooms empowered select groups of dealers where chauvinistic comments could just as soon morph into FX, bond and in this case LIBOR trades. '
One of my clients has been told not to use chat boxes for orders any more for the very reason that there have been past FX transgressions at his firm. I don’t want to sound too sanctimonious, but the crass banter and trading you witness on those pages is totally lacking discipline not to mention any moral compass. Good on the SFO. Dealers need to realise this isn’t some silly game. The next step is to make City pros personally liable for criminal malfeasance. If you hit people in their back pocket, they’ll get the joke - get serious, and stop misbehaving.