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American among three ex-Barclays traders convicted in London LIBOR trial

Three former employees of Barclays Bank plc were convicted Monday by a jury at the Southwark Crown Court of manipulating the U.S. Dollar LIBOR.

Jonathan James Mathew, Jay Vijay Merchant, and Alex Julian Pabon — an American citizen — were found guilty of conspiracy to defraud after an 11-week trial.

The jury didn’t reach verdicts for two other defendants — Stylianos Contogoulas and Ryan Michael Reich.

Reich is also an American.

While working at Barclays, the convicted defendants conspired to rig submissions for the U.S. Dollar LIBOR, the Serious Fraud Office said.

LIBOR – the London Interbank Offered Rate – is the global benchmark interest rate used to set a range of financial deals. It underpins trillions of pounds of investments and contracts both in the UK and around the world and influences interest rate that banks charge their mortgage or loan customers.

The big banks including Barclays made submissions to the London-based British Bankers’ Association to calculate LIBOR for 10 currencies at 15 maturities, ranging from overnight to one year.

Merchant and Pabon were LIBOR traders. Mathew was a submitter.

A sixth defendant, Peter Charles Johnson, a senior submitter and head U.S. Dollar cash trader, pleaded guilty in October 2014 to conspiracy to defraud.

Their offenses happened between June 2005 and September 2007.

Commenting on Monday’s verdict, Serious Fraud Office director David Green said:

The trial in this country of American nationals also demonstrates the extent to which the response to LIBOR manipulation has been international and the subject of extensive cooperation between U.S. and UK authorities.

The convicted defendants “dishonestly submitted rates specifically intended to advantage Barclays and themselves financially and to defraud those with whom they were trading,” the SFO said.

Johnson, Mathew, Merchant, and Pabon are scheduled to be sentenced on July 6 and 7.

The SFO has 14 days from Monday to consider whether to seek a re-trial of Contogoulas and Reich.

Five defendants have now been convicted in London for rigging LIBOR.

Tom Hayes was convicted in August 2015 and is serving an 11 year prison sentence. 

Six other defendants were acquitted in January 2016 in the second LIBOR trial.

A total of 19 individuals have been charged in the UK so far.

Six are waiting for trial, set to start in September 2017.

*     *     *

In the United States, 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.

Last month, two former Deutsche Bank AG  traders were indicted for their alleged scheme to rig U.S. Dollar LIBOR.

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.

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

Six banks have reached LIBOR resolutions in the United States. They are Barclays Bank PLC, Deutsche Bank AG, 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 — both UK citizens — were jailed for rigging LIBOR rates for U.S. Dollars and Japanese Yen.

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.

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.

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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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