US authorities are investigating the interdealer brokers Icap and RP Martin as part of a widening probe into Libor rigging, it has been reported.
The US Justice Department and the Commodity Futures Trading Commission are understood to be looking at the role the two City brokers might have played in the scandal — although the investigation centres on a small number of employees rather than senior executives.
Icap, which is run by former Tory Party treasurer Michael Spencer, is already being investigated by the Financial Services Authority and has taken action against four members of staff.
Spencer has so far refused to comment on the investigation or individuals but has made it clear that firm action will be taken against any staff found to have been involved in Libor rigging. Last week he said: “As I have said before, however, Icap is not a bank, it does not set or participate in setting Libor and has no financial incentive whatsoever in the level of Libor. I will say though that this is a matter we are taking extremely seriously. We are working with the FSA to understand exactly what has gone on.”
Interdealer brokers act as intermediaries between buyers and sellers of complex products ranging from foreign exchange to commodities. According to reports in the Wall Street Journal, US regulators are looking into whether employees at both brokers helped bank traders rig their Libor submissions. In one example cited in the report, employees at the brokers are accused of planting fake prices into computer systems, which were then used by bank staff to submit data to the Libor setting panels.
RP Martin declined to comment. In December two of its employees, Terry Farr and Jim Gilmour, were arrested and questioned by City of London Police in connection with the global probe. Neither has since been charged by the police.
The Libor scandal has so far led to huge fines for Barclays, UBS and Royal Bank of Scotland. About 20 financial institutions have been investigated over the alleged rigging of the benchmark rates.