Farr, who formerly worked as a broker and held the position of Manager on the JPY Desk at Martins, has been found to have arranged several wash trades.
The UK Financial Conduct Authority (FCA) today announces that it has banned former Martins Brokers (UK) Ltd (‘Martins’) broker Terry Farr from performing any function in relation to any regulated financial activity. The regulator explains that Mr Farr acted dishonestly and lacked integrity, and is not fit and proper to perform any function in relation to any regulated activity.
Mr Farr formerly worked as a broker and held the position of Manager on the Japanese Yen Desk at Martins. He arranged transactions in a range of JPY products, including cash, forwards and derivatives, between banks and other financial institutions.
The FCA has determined that between September 19, 2008 and August 25, 2009, Mr Farr arranged nine wash trades. The purpose of the wash trades was to obtain unwarranted brokerage payments for Martins with no legitimate commercial purpose.
Mr Farr has been found to have encouraged a trader at UBS to believe that Mr Farr was willing to attempt to influence the JPY LIBOR submissions of other banks at the trader’s request. In exchange, the trader entered into the wash trades to reward Mr Farr for his perceived assistance. The brokerage Martins received as a result of the wash trades was not for any form of legitimate service and was unrelated to any proper purpose for which brokerage payments may be made. Mr Farr was aware that the wash trades were improper but arranged them in any event and proactively sought to conceal them in his dealings with traders.
As a result of the wash trades, Martins received £258,151.09. Mr Farr knew that this increased the bonus pool available to him and his colleagues on the JPY Desk.
The FCA started its investigation into Mr Farr in 2011. However, the regulator suspended its investigation due to the criminal investigation and ensuing prosecution of Mr Farr by the Serious Fraud Office for alleged conspiracy to defraud in relation to the Yen LIBOR rate submissions. Mr Farr was acquitted at the conclusion of the trial on January 27, 2016.
Let’s recall that, in January 2015, the FCA fined and banned two former senior executives of Martins for compliance and cultural failings at the firm. David Caplin (former chief executive) was fined £210,000 and Jeremy Kraft (former compliance officer) was fined £105,000. This followed previous enforcement action against Martins: in 2014, the FCA fined Martins £630,000 for misconduct relating to the London Interbank Offered Rate (LIBOR).