FINAL NOTICE

To:



Lee Bruce Stewart

ACTION

1.
For the reasons given in this Final Notice, the Authority hereby makes an
order, pursuant to section 56 of the Act, prohibiting Lee Stewart from
performing any function in relation to any regulated activity carried on by
any authorised or exempt person, or exempt professional firm. This order
takes effect from 21 July 2015.

SUMMARY OF REASONS

2.
The Authority has taken this action because during his employment as a
Trader at Rabobank, which ended in 2009, Mr Stewart committed
deliberate misconduct by attempting to manipulate the US Dollar LIBOR
rate.

3.
On 23 March 2015 Mr Stewart pleaded guilty to an Information pursued by
the United States Department of Justice (“DOJ”) containing one count of
conspiracy to commit wire fraud and bank fraud relating to his attempts to
manipulate US Dollar LIBOR. Mr Stewart’s guilty plea relates to the period
from spring 2007 until he left Rabobank in 2009. A copy of the Information
is set out at Annex B to this Notice.

4.
In light of his criminal conviction for an offence of dishonesty, the
Authority finds that Mr Stewart lacks honesty and integrity and, therefore,
is not fit and proper.

DEFINITIONS

5.
The definitions below are used in this Notice:

“Act” means the Financial Services and Markets Act 2000;

“Authority” means the body corporate previously known as the Financial
Services Authority and renamed on 1 April 2013 as the Financial Conduct
Authority;

“BBA” means the British Bankers’ Association, which until 31 January 2014
was the administrator of LIBOR;

“DEPP” means the Authority’s Final Procedure and Penalties Manual;

“EG” means the Authority’s Enforcement Guide;

“ENF” means the Authority’s Enforcement Manual;

“FIT” means the Authority’s Fit and Proper test for Approved Persons;

“LIBOR” means the London Interbank Offered Rate;

“Panel Bank” means a bank with a place on the administrator of LIBOR’s
panel (the BBA’s panel during the Relevant Period) for contributing LIBOR
submissions in one or more currencies;

“Rabobank” means the Coöperatieve Centrale Raiffeisen-Boerenleenbank
B.A.;

“Submitter” means those responsible for determining and making LIBOR
submissions on behalf of a Panel Bank;

“Trader” means a person trading interest rate derivatives or trading in the
money markets;

“Trading Positions” means trading book positions held either in respect of
derivative positions or money market positions; and

“Tribunal” means the Upper Tribunal (Tax and Chancery Chamber).

FACTS AND MATTERS

6.
LIBOR is an interest rate benchmark fundamental to the operation of both
UK and international financial markets. LIBOR is published daily in a
number of currencies and maturities. Until 31 January 2014, LIBOR was
administered by the BBA and was set according to a definition published
by the BBA.1 Banks on the LIBOR panels make daily submissions to the
BBA to enable LIBOR to be calculated.

7.
Rabobank delegated responsibility for determining and making LIBOR
submissions to Submitters on its money markets desk.

1 Since 1 February 2014, LIBOR has been administered by ICE Benchmark Administration Limited
(“IBA”) https://www.theice.com/iba


8.
Mr Stewart was employed by Rabobank as a Trader between 1993 and
2009. Mr Stewart had extensive experience of the market.

9.
On 29 October 2013 the Authority gave Rabobank a Final Notice for
significant failings in relation to LIBOR.

10.
On 23 March 2015 Mr Stewart pleaded guilty to the Information containing
the offence in respect of conduct between spring 2007 and the end of his
employment at Rabobank in 2009. The criminal charge against Mr Stewart
related to his deliberate misconduct in attempting to manipulate the US
Dollar LIBOR benchmark.

FAILINGS

11.
The regulatory provisions relevant to this Notice are referred to in Annex
A. FIT 1.3.1G states that the Authority will have regard to, among other
things, a person’s honesty and integrity when assessing the fitness and
propriety of a person to perform a particular controlled function.

12.
On 23 March 2015 Mr Stewart pleaded guilty in the U.S. to an Information
containing the offence of conspiracy to commit wire fraud and bank fraud.

13.
Mr Stewart’s criminal conviction demonstrates a lack of honesty and
integrity such that he is not a fit and proper person to perform any
function in relation to any regulated activity carried on by any authorised
person.

SANCTION

14.
The Authority considers that Mr Stewart’s actions as described in this
notice demonstrate that he lacks honesty (and therefore integrity). The
seriousness of the misconduct was aggravated by the fact that:

a. Mr Stewart was an experienced employee of Rabobank and was an

approved person, holding the CF30 (Customer) function.

b. Mr Stewart engaged in this improper activity over a prolonged

period of time.

c. LIBOR is of central importance to the operation of UK and

worldwide financial markets. Doubts about the integrity of LIBOR
threaten confidence in those markets.

15.
The Authority therefore prohibits Mr Stewart from carrying out any
function in relation to any regulated activity carried out by any authorised
person, exempt person or exempt professional firm.

PROCEDURAL MATTERS

Decision maker

16.
The decision which gave rise to the obligation to give this Notice was made
by the Settlement Decision Makers.

17.
This Final Notice is given under, and in accordance with section 390 of the
Act.

18.
Sections 391(4), 391(6) and 391(7) of the Act apply to the publication of
information about the matter to which this notice relates. Under those
provisions, the Authority must publish such information about the matter
to which this notice relates as the Authority considers appropriate. The
information may be published in such manner as the Authority considers
appropriate. However, the Authority may not publish information if such
publication would, in the opinion of the Authority, be unfair to you or
prejudicial to the interests of consumers or detrimental to the stability of
the UK financial system.

19.
The Authority intends to publish such information about the matter to
which this Final Notice relates as it considers appropriate

Authority Contacts

20.
For more information concerning this matter generally, contact Patrick
Meaney (direct line: 020 7066 7420) or Alex Odell (direct line: 020 7066
5158) of the Enforcement and Market Oversight Division of the Authority.

Therese Chambers
Project Sponsor
Financial Conduct Authority, Enforcement and Market Oversight Division







ANNEX A

GUIDANCE AND POLICY TO STATUTORY PROVISIONS AND RULES

RELEVANT STATUTORY PROVISIONS

1.
The Authority has the power, pursuant to section 56 of the Act, to make a
prohibition order if it appears to the Authority that an individual is not a fit
and proper person to perform functions in relation to a regulated activity
carried on by an authorised person, exempt person or exempt professional
firm. Pursuant to section 56(2) of the Act, such an order may relate to a
specified function, any function falling within a specified description or any
function.

The Fit and Proper test for Approved Persons (“FIT”)

2.
FIT sets out the criteria for assessing a person’s fitness and propriety.

3.
FIT 1.1.2G states:

“The purpose of FIT is to set out and describe the criteria that the
Authority will consider when assessing the fitness and propriety of a
candidate for a controlled function (see generally SUP 10 on approved
persons). The criteria are also relevant in assessing the continuing fitness
and propriety of approved persons. The criteria that the Authority will
consider in relation to an authorised person are described in COND.”

4.
FIT 1.2.3G states:

“Under section 63(1) of the Act (Withdrawal of approval), the Authority
may withdraw its approval if it considers that the person in respect of
whom the approval was given is not fit and proper to perform the
controlled function to which the approval relates.”

5.
FIT 1.3.1G states that the Authority will have regard to, among other things,
a person’s honesty and integrity when assessing the fitness and propriety of
a person to perform a particular controlled function.

6.
FIT 1.3.3G states:

“The criteria listed in FIT 2.1 to FIT 2.3 are guidance and will be applied in
general terms where the Authority is determining a person’s fitness and
propriety. It would be impossible to produce a definitive list of all the
matters which would be relevant to a particular determination.”

7.
FIT 2.1.1 states:

“In determining a person's honesty, integrity and reputation, the Authority
will have regard to all relevant matters including, but not limited to, those
set out in FIT 2.1.3 G which may have arisen either in the United Kingdom
or elsewhere[…]”

Prohibition order

8.
The Authority’s approach to deciding whether to impose a prohibition order,
and the scope of any such prohibition order, is set out in chapter 9 of EG. The

provisions of EG set out below are those which were in force from 28 August
2007.

9.
EG 9.1 sets out how the Authority’s power to make a prohibition order under
section 56 of the Act helps it work towards achieving its regulatory
objectives. The Authority may exercise this power where it considers that, to
achieve any of its objectives, it is appropriate either to prevent an individual
from performing any functions in relation to regulated activities or to restrict
the functions which he may perform.

“In deciding whether to make a prohibition order and/or, in the case of an
approved person, to withdraw its approval, the Authority will consider all
the relevant circumstances including whether other enforcement action
should be taken or has been taken already against that individual by the
Authority. … in some cases the Authority may take other enforcement
action against the individual in addition to seeking a prohibition order
and/or withdrawing its approval. The Authority will also consider whether
enforcement action has been taken against the individual by other
enforcement agencies or designated professional bodies.”

11. EG 9.5 states:

“The scope of a prohibition order will depend on the range of functions
which the individual concerned performs in relation to regulated activities,
the reasons why he is not fit and proper and the severity of risk which he
poses to consumers or the market generally.”

12. EG 9.8 to 9.14 set out guidance on the Authority’s approach to making

prohibition orders against approved persons.

13. EG 9.8 states that, in deciding whether to make a prohibition order, the

Authority will consider whether its regulatory objectives can be achieved
adequately by imposing disciplinary sanctions.

14. Specifically in relation to approved persons, EG 9.9 states that in deciding

whether to make a prohibition order, the Authority will consider all the
relevant circumstances of the case. These include, but are not limited to, the
following:

(2) Whether the individual is fit and proper to perform functions in
relation to regulated activities. The criteria for assessing the fitness
and propriety of approved persons are set out in FIT 2.1 (Honesty,
integrity and reputation); FIT 2.2 (Competence and capability) and FIT
2.3 (Financial soundness).

(3) Whether, and to what extent, the approved person has:

a.
[…..]

b.
been knowingly concerned in a contravention by the
relevant firm of a requirement imposed on the firm by
or under the Act (including the Principles and other
rules) or failed to comply with any directly applicable
Community regulation made under MiFID or any
directly applicable provision of the auction regulation.

(8) The severity of the risk which the individual poses to consumers
and to confidence in the financial system.

15. One example of a type of behaviour which have previously resulted in the

Authority deciding to issue a prohibition order or withdraw the approval of an
approved person, set out in EG 9.12, is “severe acts of dishonesty”.

ANNEX B
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA
INFORMATION

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(Conspiracy to Commit Wire Fraud and Bank Fraud)

The Department of Justice charges:

1.
From at least in or about May 2006 through at least in or about early 2011, in the

Southern District of New York and elsewhere, LEE STEWART, the defendant, together with

Anthony Allen, Paul Thompson, Tetsuya Motomura, Anthony Conti, and others known and

unknown, did knowingly combine, conspire, confederate, and agree to commit certain

offenses against the United States, that is:

(A) to devise and intend to devise a scheme and artifice to defraud, and to obtain

money and property by means of materially false and fraudulent pretenses,

representations, and promises, and to transmit and cause to be transmitted certain

wire communications in_ interstate and foreign commerce for the purpose of

executing the scheme; to wit, the defendant and others engaged in a scheme to

manipulate and attempt to manipulate to their advantage the benchmark interest

rates referenced by derivative products throughout the financial industry, by the

1

dissemination, and submission, of false and fraudulent statements intended to

influence and manipulate the benchmark interest rates to which the profitability of

interest rate derivative trades was tied, and the conspirators contemplated,

foresaw, and caused use of wires in interstate and foreign commerce in carrying

out the scheme, in violation of Title 18, United States Code, Section 1343; and

(B) to execute and attempt to execute a scheme and artifice to defraud a financial

institution, the deposits for which were at the time insured by the Federal Deposit

Insurance Corporation; and to obtain and attempt to obtain moneys~ funds, credits,

assets, and other properties owned by and under the custody and control of a

financial institution by means of materially false and fraudulent pretenses,

represe~tations, and promises, as well as by omission of material facts in violation

of Title 18, United States Code, Section 1344.

2.
It was a part and an object of the conspiracy that LEE STEWART, the defendant,

and others known and unknown, engaged in a scheme to manipulate and attempt to manipulate a

benchmark interest rate known as. the London Interbank Offered Rate (LIBOR), to which was

tied the profitability of interest rate derivative trades in which the defendant and others had a

financial interest. The scheme had an effect on one or more financial institutions, within the

meaning of Title 18, United States Code, Sections 20 and 3293(2).

3.
In furtherance of the conspiracy and to affect the illegal objects thereof, LEE

STEWART, the defendant, and others known and unknown, committed the following overt act,

among others, in the Southern District of New York and elsewhere:

2

a. on or about September 2, 2005, LEE STEW ART and Anthony Conti conspired to

fix and manipulate the day's LIBOR rate by causing their employer, Co6peratieve

Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), a financial institution and

global financial services company headquartered in Utrecht, the Netherlands, to

make a LIB OR submission that was calculated to benefit LEE STEW ART's

trading position. Rabobank and Bank-B, a federally-insured financial institution

headquartered in Charlotte, North Carolina, had previously entered into an interest

rate swap transaction that had a reset date of September 2, 2005. On or about

September 2, 2005, a third party publishing corporation published Rabobank's

manipulated LIBOR submission by sending a wire communication from the

United Kingdom to recipients in New York, New York.

(Title 18, United States Code, Section 1349)

FORFEITURE ALLEGATION

4.
As a result of committing the offense alleged in Count One of this Information,

LEE STEW ART, the defendant, shall forfeit to the United States pursuant to Title 18, United

States Code, Section 982, any property constituting or derived·from proceeds obtained directly or

indirectly as a result of the wire fraud and bank fraud offense alleged in Count One of this

Information, including but not limited to a sum of United States currency to be determined by the

Court at sentencing, in that such sum in aggregate is property representing the amount of

proceeds obtained as a result of the offenses.

5.
If any of the above-described forfeitable property, as a result of any act or

omission of the defendant:

3

(a) cannot be located upon the exercise of due diligence;

(b) has been transferred or sold to, or deposited with, a third person;

(c) has been placed beyond the jurisdiction of the Court;

(d) has been substantially diminished.in value; or

(e) has been commingled with other property which cannot be subdivided without

· difficulty;

it is the intent of the United States, pursuant to Title 18 United States Code, Section 982(b), to

seek forfeiture of any other property of said defendant up to the value of the above forfeitable

property. ·

(Title 18, United States Code, Section 982 and Title 18, United States Code,

ANDREW WEISSMANN
Chief, Fraud Section
Criminal Division
United States Department of Justice

Trial Attorney
CAROL L. SIPPERLY
Senior Litigation Counsel
Criminal Division
United States Department of Justice

Section 1349).

JEFFREY D. MARTINO
Chief, New York Office
Antitrust Division
United States Department of Justice

MICHAEL T. KOENIG
Trial Attorney
Aliltitrust division
United States Department of Justice