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DOJ indicts two former Deutsche Bank traders for LIBOR fraud

Two former Deutsche Bank AG  traders — the bank’s supervisor of the Pool Trading Desk in New York and a derivatives trader in London — were indicted for their alleged roles in a scheme to manipulate the U.S. Dollar London InterBank Offered Rate, the DOJ said today.

Matthew Connolly, 51, of Basking Ridge, New Jersey, and Gavin Campbell Black, 46, of London, were charged with one count of conspiracy to commit wire fraud and bank fraud and nine counts of wire fraud.

Connolly was taken into custody Thursday.

The London Interbank Offered Rate, or LIBOR, is the benchmark for short term interest rates for high-demand currencies around the world. It’s used to set interest rates for trillions of dollars of mortgages, credit cards, and student loans, among other financial products.

On May 31, a federal grand jury in the Southern District of New York returned a 10-count indictment against the defendants.

Another former Deutsche Bank derivatives trader and desk manager in London, Michael Curtler, 43, pleaded guilty in October 2015 to one count of conspiracy to commit wire and bank fraud in the LIBOR case.

The DOJ has now charged 13 individuals in the case. Three of them have pleaded guilty, two were convicted at trial, and the charges against the others are pending.

In April last year, Frankfurt, Germany-based Deutsche Bank entered into a deferred prosecution agreement with the DOJ to resolve wire fraud and antitrust charges for secretly manipulating LIBOR. A UK affiliate pleaded guilty to one count of wire fraud. They together paid a $775 million fine.

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Five other banks have reached LIBOR resolutions in the United States. They are Barclays Bank PLC, UBS AG, The Royal Bank of Scotland plc, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), and Lloyds Banking Group plc.

In March this year, two former derivatives traders at Rabobank were jailed for rigging LIBOR rates for U.S. Dollars and Japanese Yen. Both are UK citizens.

Anthony Allen, 44, of Hertsfordshire, England, the bank’s former global head of liquidity and finance in London, was sentenced to two years in prison by Judge Jed Rakoff in federal court in Manhattan.

Anthony Conti, 46, of Essex, England, a former senior trader on the bank’s money markets desk in London, was sentenced to a year and a day in prison.

Netherlands-based Rabobank paid a criminal penalty of $325 million in October 2013 for manipulating LIBOR and entered into a deferred prosecution agreement with the DOJ.

Three other former Rabobank employees — Paul Robson, Lee Stewart, and Takayuki Yagami — have also pleaded guilty to a conspiracy charge.

All three are cooperating with the DOJ and waiting to be sentenced.

Two other former Rabobank employees, Tetsuya Motomura, 43, of Tokyo, and Paul Thompson, 50, of Dalkeith, Australia, have been charged and are awaiting trial.

In the UK, the Serious Fraud Office has charged 20 defendants with manipulating LIBOR.

A jury in London acquitted six of the defendants in January.

Earlier, another London jury convicted Tom Hayes, a former derivatives trader at UBS and Citigroup. He’s serving a nine-year prison sentence.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016

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1 Comment

  1. It's the LONDON Interbank Offered Rate, but the comparison of enforcement activity by the SFO vs the DOJ looks like the U.S. Is the real guardian of the market.

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