Release Date: 5th March 2018
To access the original FCA document, click here.
Summary
The Financial Conduct Authority (FCA) has fined Guillaume Adolph, a former Deutsche Bank trader, £180,000 and banned him from performing any regulated financial activity. Adolph’s misconduct involved manipulating LIBOR submissions to benefit his trading positions, compromising the integrity of these critical benchmarks.
Adolph, who traded short-term interest rate derivatives linked to CHF (Swiss Franc) and JPY (Japanese Yen) LIBOR, acted as Deutsche Bank’s primary JPY LIBOR submitter for a period. Between 25 July 2008 and 11 March 2010, Adolph:
- Requested Deutsche’s CHF LIBOR submitters to adjust submissions to favour his trading positions.
- Factored in his own trading positions when submitting JPY LIBOR rates.
- Colluded with a trader at another LIBOR panel bank to influence JPY LIBOR submissions based on mutual requests.
The FCA found Adolph’s actions reckless and improper, showing a disregard for proper market conduct standards. As a result, he was deemed unfit to perform any regulated financial activity. Mark Steward, Director of Enforcement and Market Oversight at the FCA, highlighted that Adolph’s behaviour threatened the integrity of important financial benchmarks, and his ban serves to protect the financial services industry.
Key Takeaways for Other Firms:
- Integrity in Submissions: Ensure all financial benchmark submissions are free from personal or external influence to maintain market integrity.
- Robust Oversight: Implement rigorous oversight mechanisms to monitor traders’ activities and prevent misconduct.
- Ethical Standards: Foster a culture of high ethical standards and accountability within the organisation.
- Training and Awareness: Provide comprehensive training to employees on the importance of adhering to market conduct standards and the implications of misconduct.
- Internal Controls: Strengthen internal controls to detect and address potential manipulative behaviour promptly.
In conclusion, the FCA’s fine and ban on Guillaume Adolph underscore the critical importance of maintaining integrity in financial markets. Firms must ensure robust internal controls and a strong ethical culture to prevent similar misconduct, thereby protecting the financial system’s overall integrity.
Back to the Dear CEO letter archives.