The Financial Conduct Authority imposed a financial penalty of £250,000 on former Royal Bank of Scotland interest rate derivatives trader, Neil Danziger, and prohibited him from performing any function in relation to any regulated financial activity.
Danziger formerly worked at RBS trading products referenced to Japanese Yen (JPY) LIBOR. Additionally, on occasion he made RBS’s JPY LIBOR submissions to the British Bankers Association when RBS’s primary submitters were not available. The FCA found that Danziger was knowingly concerned in RBS’s failure to observe proper standards of market conduct and has determined that he is not a fit and proper person because he acted recklessly and lacks integrity.
Specifically, the FCA found that between 14 February 2007 and 22 November 2010, Danziger:
Routinely made requests to RBS’s primary submitters, intending to benefit the trading positions for which he and other derivatives traders were responsible;
Took those trading positions into account when acting as a substitute submitter; and
On two occasions, obtained a broker’s assistance to attempt to manipulate the JPY LIBOR submissions of other banks.
In addition, between 19 September 2008 and 25 August 2009, Danziger entered into 28 wash trades—risk-free trades, with the same party, in pairs that cancelled each other out and for which there was no legitimate commercial rationale. The purpose of these wash trades was to make or facilitate brokerage payments to two firms of brokers in recognition of his receipt of personal hospitality. He acted recklessly, and therefore with a lack of integrity, in deliberately closing his mind to the risk that his actions were improper, the FCA found.
On 18 June 2014, the FCA issued Danziger with a Warning Notice, but proceedings were stayed due to the ongoing criminal investigation by the Serious Fraud Office into certain individuals who formerly worked at RBS.