Ex-Rabobank Traders on Trial for Libor Rigging in the US

In New York City, the first criminal trial in the US involving traders accused of rigging the London interbank offered rate is underway. Anthony Conti and Anthony Allen, both former Rabobank traders, are accused of conspiring to turn in fraudulent rate reports for Libor to help others make money off the trades.

According to prosecutor Carol Sipperly, from ’06 to ’11 the two men gave Rabobank and themselves “unfair advantage” with their actions. Sipperly cited messages, emails, and testimony from three other ex-Rabobank traders who pleaded guilty to similar criminal charges.

Defense attorneys for Allen and Conti contended that the rate submissions were presented in good faith and that it was the traders who already pleaded guilty who had engaged in wrongdoing. Allen’s lawyer argued that his client never got compensation for the profits made by the other traders.

Libor rates are established daily in London based on submissions made by 16 banks. The four lowest and highest rates are eliminated with the remaining eight averaged. The benchmark that results represents the rates that banks can borrow from each other for specific periods. However, numerous banks, including Barclays (BARC), JPMorgan Chase (JPM) Rabobank, and Citigroup (c) have had to pay billions of dollars to regulators to settle charges of Libor rigging.

The government believes that Conti, who was Rabobank’s main submitter for US Libor and back-up submitter for Yen Libor, and Allen were part of a system that let traders who made bets linked to Libor decide the bank’s rate submissions.

The two men deny they are guilty of the criminal charges, including multiple counts of conspiracy and wire fraud. To date, 13 people have been charged in the United States over Libor allegations.

Meanwhile, on the other side of the Atlantic Ocean, six ex-brokers also accused of manipulating Libor are on trial in the United Kingdom. They are former ICAP (IAP) traders Danny Wilkinson, Darrell Read, and Colin Goodman, ex-Tullet Preobon trader Noel Cryan, and ex-RP Martin traders Terry Farr and James Gilmour. Prosecutors in London contend that the men worked to convince bank traders to submit false Libor rates and conspired with other traders.

These two trials come not long after ex-UBS (UBS) and Citigroup (C) trader Tom Hayes was convicted for Libor rigging charges. The UK’s Serious Fraud Office said that the ex-derivatives broker was at the heart of a web of traders at a number of firms that worked together to manipulate the benchmark. He allegedly pressured people to stay involved, training junior staffers to rig Libor, and made corrupt payments to brokers.

Hayes is sentenced to 14 years behind bars. He is appealing.

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Trial Opens for Former Rabobank Traders Accused of Libor Rigging, The Wall Street Journal, October 14, 2015

Ex-Rabobank trader charged by U.S. for Libor scheme pleads not guilty, Reuters, April 13, 2015

Ex-UBS and Citigroup Trader Gets 14 Years in Prison for Libor Rigging, Institutional Investor Securities Blog, August 5, 2015

Six Ex-Brokers Go to Trial Over Libor Rigging Allegations in London, Institutional Investor Securities Blog, October 6, 2015