TP ICAP hit with ?15.4m fine over historic Tullett Prebon trades

(Sharecast News) - Interdealer broker TP ICAP was slapped with a £15.4m fine on Friday by the UK's financial regulator for failing to control traders at its Tullett Prebon unit between 2008 - 2011.
The Financial Conduct Authority (FCA) found that former managers in TP ICAP's global broking division and in TP ICAP's compliance department "failed to act with due skill, care and diligence". It also lambasted the broker for failing to provide key evidence.

TP ICAP agreed to settle the case in return for a discount on the fine, which would have been £22m, the FCA said.

Investigators said Tullett Prebon (TPEL) in 2011 failed to find broker audio files and produce them to the FCA in a timely manner, together with the account given by TPEL to the FCA as to how those files were discovered, the company said in a statement on Friday.

The case revolved around so-called "wash" trades, which involved no change in beneficial ownership and had "no legitimate underlying commercial purpose which generated unwarranted and unusually high amounts of brokerage for the firm", the FCA said in a separate statement.

FCA executive director of enforcement and market oversight Mark Steward described the trades as "entirely improper" and undermined the proper function of the market.

"The market performs important public functions and is not a private game of self-enrichment," he said. "Senior management and compliance were cocooned from seeing the misconduct, and systems and controls failed to probe broker conduct, even when warning signs were visible."

"The case against Tullett Prebon was a long and complex one. The firm's failure to be open with the FCA about the existence of key evidence reflected a high degree of culpable incompetence and prejudiced the FCA enquiries."

"Obvious red flags of broker misconduct and opportunities to probe were missed. For example, when the firm made inquiries of one broker about the basis for inordinately high brokerage on one trade the broker responsible said 'you don't want to know' and no steps were taken to identify the reasons, let alone whether they were appropriate."