September 9, 2013 8:02 pm

Interdealer broker ICAP closes in on settlement over Libor claims

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ICAP is close to a settlement with global regulators over Libor rate manipulation allegations that would see the UK interdealer broker pay a fraction of the penalties handed out to banks over the scandal.

The London-based group has been negotiating with authorities in the US and the UK for nearly a year over its role in the manipulation of interbank lending and possible breaches of market conduct rules. Authorities have been examining whether ICAP brokers served as intermediaries for attempts to influence the submissions used to set Libor.

ICAP – which acts as a conduit for trades in the market – was in talks to settle for a sum that could total less than £100m, four people familiar with the situation said. However, the final total is being tightly contested and no final number has been set out for discussion.

A global regulatory penalty totalling £70m “was in the ballpark”, according to one person familiar with the situation. But two other people thought the total could go much higher, while a fourth person close to the situation said the £70m figure was “too high”.

During the course of the Libor investigation, nailing down the monetary element of each settlement has proved thorny. Defence lawyers have said the US Department of Justice is particularly hard to predict and often the last of the authorities to strike an agreement.

People familiar with the ICAP negotiations said the company and UK authorities were close to agreeing their portion of the deal but that the US penalties could move substantially. ICAP declined to comment.

However, the potential penalty that ICAP faces is likely to only be a fraction of those handed out to banks, as the interdealer broker did not participate in the daily setting of the Libor rate.

It has also repeatedly gone on record as saying that none of its senior management were ever aware of, or involved in, attempts to manipulate Libor.

So far three banks, Barclays, UBS and Royal Bank of Scotland, have all paid substantial settlements over the manipulation of Libor and related rates set in Brussels and Tokyo.

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