Fines and new rules will help tackle greed - FSA
By Kirstin Ridley and Huw Jones | December 20, 2012 4:42 AM EST
Hefty fines and tough new rules will discourage the Libor rate rigging seen at Swiss bank UBS and other banks - even if some traders will always be motivated by greed, a top UK regulator said on Wednesday.
Tracey McDermott, head of enforcement at the Financial Services Authority (FSA), said big fines had an impact on the status, reputation and credibility of banks, both in the UK and overseas.
"There will always be some people who are motivated by greed to do the wrong thing," she said.
"But I think the combination of a new, much more robust framework (of rules), the increased emphasis and understanding of the issues by the firms and the fact people will be seeing these sanctions will significantly impact on how anybody would be tempted to do this."
The FSA, jointly with Swiss and U.S. regulators, earlier on Wednesday hit UBS with a $1.5 billion fine -- the second highest penalty ever slapped on a bank -- for manipulating the London interbank offered rate (Libor) over six years to 2010.
McDermott said the FSA was investigating "a number of individuals" in relation to the UBS case, but she declined to elaborate.
In a move to strengthen its armoury, Britain approved a new financial services law on Wednesday to make the rigging of Libor and other market benchmarks a criminal offence from next April - with tougher penalties.
However, the law will not be applied retroactively, meaning the FSA will have to continue fining on the basis of breaches of general conduct principles.
The FSA has said it is focusing its investigations on seven financial institutions, but McDermott warned against assuming there would be five more fines after the UBS settlement and a similar, if much smaller, Barclays fine in June.
"We cant say until we conclude our investigations whether or not people will be fined because not necessarily every investigation ... will result in penalties," she said.
But she added: "We are beginning to focus significant resources on Libor and I'm fairly confident in saying there will be more cases - but I cant give you precise numbers."
Royal Bank of Scotland is expected to settle allegations of Libor rigging by February.
The FSA is juggling a number of Libor probes alongside U.S., European, Canadian and Japanese peers, but McDermott said she did not anticipate any reduction in the amount of resources devoted to enforcement generally.
(Editing by David Cowell)
Most Popular Slideshows
- Taylor Swift Named Forbes' Second Highest Paid Country Musician [PHOTOS]
- Celebrities Who Got Pregnant Using IVF: Busting the Myths About IVF
- Global Aviation Accidents: UN to Form Safety Task Force, Gov'ts Should Share Intelligence Info to Avert Future Incidents on Flying Over Warzones (PHOTOS)
- PageSix: Beyonce & Jay Z Union is Not About Love, All About Business & the Brand
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Apple iPhone 6 Release Date Update: 6 Most Wanted Feature Upgrades for Next iPhone
- Moto X Android 4.4.4 KitKat Update Guide: Schedule and How to Install
- Top 4 Reasons Why iPhone 6 Will Hit Big Soon After its Sept 2014 Release Date
- Top Surprising Features Of iOS 8
- Twin Malaysia Airlines MH370, MH17 Aviation Disasters Create Phobia Among Travellers
- HTC One M8 Windows Phone to Launch for Verizon; Release Date, Price, Five Fresh Features to Anticipate for New Smartphone
- OnePlus One vs. Moto X+1 – Early Specifications, Release Date and Price Faceoff