The Financial Conduct Authority (FCA) has banned Paul White from performing any function in relation to any regulated financial activity and publicly censured him. Were it not for Mr White’s serious financial hardship, the FCA would have fined him £250,000 ($357,575).
Mr White formerly worked at the Royal Bank of Scotland (RBS) as a Japanese Yen (JPY) and Swiss Franc (CHF) LIBOR submitter. The FCA has found that Mr White is not a fit and proper person because he lacks integrity by virtue of his conduct when submitting RBS’s JPY and CHF rates to the British Bankers Association (BBA), which used to administer LIBOR.
Mark Steward, director of enforcement and market oversight at the FCA said: “As a LIBOR submitter Mr White had an obligation to ensure the submissions he made were proper ones. By allowing his submissions to be set, in effect, by those with collateral financial interests in the outcome, Mr White recklessly disregarded the risk – the obvious risk - that his LIBOR submission might corrupt LIBOR’s integrity. This ban should reinforce the message that working in financial markets entails obligations and responsibilities and that serious failures will result in substantial penalties including fines and prohibitions.”
Between 8 March 2007 and 24 November 2010 (the Relevant Period), Mr White was the primary RBS submitter for JPY and CHF LIBOR. Mr White was reckless in not taking into account the consequences that in benefitting either the trading positions of RBS’s JPY and CHF derivatives traders, or his own JPY and CHF money market positions, or those of external parties, his LIBOR submissions would be improper.
During the Relevant Period, Mr White received 68 documented communications from RBS JPY and CHF derivatives traders requesting submissions that would benefit their trading positions. In addition, between March 2007 and November 2008 Mr White sat next to a CHF derivatives trader who made oral requests for CHF LIBOR submissions to him on a weekly basis. In submitting RBS’s JPY and CHF LIBOR rates to the BBA, Mr White took such requests from JPY and CHF derivatives traders into account.
Mr White also took into account requests received from brokers on behalf of an external JPY derivatives trader when making RBS’s JPY LIBOR submissions. For example, on 22 June 2010 Mr White engaged in a Bloomberg communication with an external broker as follows:
External Broker: "u got a bit less emotion in the 3's fix [JPY] today?"
White: "unchanged should be the call, u want higher?"
External Broker: "yah, if not a msve prob"
White: "will c what we can do, maybe up a pip"
External Broker: "nice, much appreciated."
The FCA issued Mr White with a Warning Notice on 18 June 2014, but proceedings were stayed due to the ongoing criminal investigation of the Serious Fraud Office into certain individuals who formerly worked at RBS. Today’s ban reflects the FCA’s commitment to protect the integrity of the UK financial system.
This is the FCA’s fourth public action against a trader for manipulating LIBOR submissions, and follows fines and bans in early 2015 for senior executives for LIBOR compliance failures.