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London - Britain's financial regulator has fined and banned the former chief executive and compliance chief of UK brokerage RP Martin for "compliance and cultural failings" that it said permitted the alleged manipulation of Libor benchmark interest rates.
In its first fine on individuals for failings related to a sprawling, global investigation, the Financial Conduct Authority (FCA) on Thursday fined former chief executive David Caplin £210 000 and former compliance officer Jeremy Kraft £105 000.
Both are also banned from holding senior financial positions, as the regulator swings its spotlight from banks and brokerages to individuals in a drive to rebuild shredded public trust in market integrity.
The FCA has sent 11 notices to individuals to date warning of enforcement action over failings related to Libor (London interbank offered rate), used to help price roughly $450trn of financial products from derivatives to consumer loans.
Along with international peers, the FCA has also fined top banks and brokerages roughly $6bn over a scandal that has prompted US and British prosecutors to charge 20 individuals with criminal, fraud-related offences to date.
UK-based minnow RP Martin was hit by a £630 000 penalty in 2014 for Libor-related misconduct - avoiding a much higher fine by pleading an inability to pay.
"Proper systems and controls were non-existent and there was a culture at Martins where revenue came first and compliance was seen as unimportant ...," said Georgina Philippou, the FCA's acting director of enforcement and market oversight.
The FCA said Caplin, 54, and Kraft, 49, presided over a business that allowed misconduct to continue undetected for years, allowing a culture in which brokers provided lavish entertainment to traders in return for commissions.
Caplin, widely known as "Mustard", was suspended in 2013 after two RP Martin employees were among the first arrested and then charged in connection with the Libor investigation.
Caplin was the dominant force at RP Martin and tried to cast the brokerage to new employees as a family to engender loyalty. The FCA said he saw compliance as unnecessary bureaucracy and resisted Kraft's attempts to involve himself with brokers.
The FCA said Kraft failed to challenge Caplin, delegated compliance responsibilities to unqualified employees and failed to seek advice and keep the FCA informed of compliance problems.
In an emailed statement, Caplin said he had acted at all times in good faith. "It is a matter of regret that the problems identified by the FCA occurred," he said.
Caplin and Kraft qualified for a 30% fine reduction after settling at an early stage of the investigation.
