Libor scandal reaches Tullet Prebon

Another name has been drawn into the Libor scandal after indications that a broker referred to by the Financial Services Authority (FSA) as ‘Broker C’ is inter-dealer broker Tullett Prebon (TLPR). It should be stressed however that there have been no formal accusations, and Tullett Prebon pointed out that it has not been informed by the FSA, or any other regulatory body, that it is under investigation in relation to Libor. But the revelations highlight how the scandal is now spreading from the banking sector and into the broader financial world.

Shares in Tullett Prebon fell 9 per cent to 273p on the news, largely reflecting reputational damage and ongoing uncertainty about the outcome of the allegations. Numis Securities reckons that an estimated £52m held in cash will be more than enough to cover any possible FSA fine. But the news has come at a bad time for the broker as global economic weakness has sapped investor confidence and risk appetite. And while volume has picked up a little since the start of the year, the real catalyst to boost volume would be an increase in US interest rates, and that looks to be a distant prospect. Meanwhile, the uncertainty will gnaw away at investors’ confidence, while in the background there is the prospect of fresh legislation in the wake of the Libor controversy.

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