ICAP, RP Martin, Tullett Prebon brokers face Libor trial

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Six former brokers from ICAP, RP Martin and Tullett Prebon will face a London jury on Tuesday over allegations they were part of a criminal conspiracy to rig benchmark interest rates in the world's second Libor trial.

The men, aged between 44 and 53, are the first brokers to be tried over alleged rigging of the London interbank offered rate (Libor), a benchmark for about $450 trillion of financial contracts worldwide, from complex derivatives to student loans.

The trial comes more than seven years after U.S. regulators first examined how Libor rates were set, sowing the seeds of a global inquiry that culminated in authorities fining some of the world's most powerful banks and brokerages $9 billion, charging 21 men and overhauling how benchmarks such as Libor are policed.

Interdealer brokers became a focus for the inquiry because of the role they play when sharing information with their networks of traders and matching buyers and sellers of bonds, currencies and swaps, for which they charge a fee.

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Britain's Serious Fraud Office (SFO) alleges that Darrell Read, Colin Goodman, Danny Wilkinson, Terry Farr, James Gilmour and Noel Cryan formed part of a conspiracy with former UBS and Citigroup trader Tom Hayes and other brokers and traders to rig yen-denominated Libor rates for profit.

The men, who have pleaded not guilty, each face one or two counts of conspiracy to defraud. Each count carries a maximum jail sentence of 10 years, although such terms are often served concurrently. The trial at London's Southwark Crown Court is scheduled to last up to 14 weeks.

The prosecution alleges that Read, Goodman and Wilkinson, all former ICAP employees, conspired with at least seven others, including three former ICAP colleagues and four former UBS traders, including Hayes, to rig yen Libor rates between August 2006 and December 2009.

Goodman and Read are also charged with a second count of conspiracy to defraud with Hayes and others between December 2009 and September 2010.

Farr and Gilmour, former RP Martin brokers, are charged with conspiring to rig rates with others, including Hayes and three other former UBS employees, a former Rabobank trader and a former HSBC trader, between August 2006 and December 2009.

Farr also faces a second count of conspiracy between December 2009 and September 2010 with Hayes and others.

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Cryan, a former broker at Tullett Prebon, allegedly conspired with a former colleague and two former UBS traders, including Hayes, among others, between February and December 2009.

The SFO, whose case will be led by veteran counsel Mukul Chawla, alleges the men dishonestly agreed to procure Libor rates that would benefit the trading of people such as Hayes, deliberately disregarding how rates should be set and prejudicing the economic interest of others.

Lawyers for the defendants did not respond to requests for comment.

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Libor is an average interest rate calculated through an "honour system", when a panel of major banks report their estimated costs of borrowing from each other in different currencies over differing borrowing periods to an administrator.

But oversight of the system was lax. Libor was administered at the time by the British Bankers' Association, an industry lobby group that has denied knowledge that rates were not accurate as lending dried up during the credit crisis.

The world's third Libor trial is scheduled for Oct. 13, when two former Rabobank traders appear in court in New York. Six formerBarclays Libor traders and submitters face a London trial next January.