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UK FCA bans ex-Martins broker over wash trades

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UK FCA bans ex-Martins broker over wash trades

The U.K. Financial Conduct Authority banned Terry Farr, a former broker at Martins Brokers (UK) Ltd., from carrying out functions related to any regulated financial activity, saying he had "acted dishonestly and lacked integrity."

Between Sept. 19, 2008, and Aug. 25, 2009, Farr arranged nine so-called "wash trades," which are paired risk-free trades carried out by the same party that cancel each other out and had no legitimate commercial purpose. Using his former position as manager on the Japanese yen desk at Martins, Farr convinced a trader at UBS Group AG that he would influence the yen desk London interbank offered rate submissions made by other banks at the trader's request. In exchange, the trader entered into the wash trades as reward for Farr's perceived assistance, the FCA noted.

As a result of the wash trades, Martins received £258,151.09 in unwarranted fees, which Farr knew would increase the bonus pool for himself and his colleagues on the yen desk, the regulator added.

The FCA began its probe into Farr in 2011, but had to suspend it after the U.K. Serious Fraud Office prosecuted him for alleged conspiracy to defraud in a case related to the yen Libor submissions, of which he was acquitted Jan. 27, 2016.