Wrapping up its case, the UK’s Serious Fraud Office accused former ICAP (IAP) brokers Danny Wilkinson, Darrell Read, and Colin Goodman, ex-Tullet Prebon employee Noel Cryan, and ex-RP Martin brokers Terry Farr and James Gilmour of behaving like a “well-oiled machine” as they allegedly helped former Citi (C) and UBS (UBS) trader Tom Hayes manipulate the London interbank offered rate (Libor). The office’s lawyer said that the six men are guilty of conspiracy to defraud.
In addition to purportedly assisting Hayes to Libor’s yen variant by deceiving clients about the market’s conditions, the men are also accused of trying to convince traders at other banks to submit false Libor rates. The prosecution has said that for the ex-brokers alleged wrongdoing, they received hundreds of thousands of pounds in kickbacks. The SFO said that the former traders agreed to to try to manipulate Libor in return for “wash trades,” which are transactions intended to make it look as if a sale and purchase have happened even though there has been no change in ownership.
All of the men have pleaded not guilty, with five of them maintaining that they were never involved in the Libor rigging scam at all. Ex-RP Martin trader Terry Farr is the only one who has admitted that he tried to help Hayes. However, his defense team argued that Farr was not aware that his actions were wrong because he only had a basic understanding of the finance industry and didn’t understand derivatives. Also, Cryan said that he lied when he told Hayes he was helping him manipulate Libor. He claims that he never actually engaged in the wrongdoing alleged. Hayes, who recently succeeded in getting his 14-year prison sentence reduced to 11 years following an appeal, made over $300M for his former employers by rigging Libor.
The defense has yet to make its closing statements in the Libor trial of these six men.
Regulators have been engaged in a global probe into allegations of Libor manipulation. Numerous banks, including JPMorgan Chase (JPM), Barclays (BAR), Citigroup, and Rabobank have already reached settlements collectively agreeing to pay billions of dollars to resolve Libor rigging charges.
Just as this trial is wrapping up, another interest-rate benchmark rigging trial has been scheduled. This one will take place in September 2017, for six defendants who are former Barclays and Deutsche Bank AG (DB) employers. They are Christian Bittar, formerly of Deutsche Bank, current Deutsche Bank employee, Achim Kraemer, and ex-Barclays employees Carlo Palombo, Colin Bermingham, Sisse Bohart, and Philippe Moryoussef. They are accused of conspiring with others from ’05 and ’09 to make and get submissions related to the euro interbank offered rate. They are slated to enter pleas in this case at the end of the year.
The euribor is Libor’s euro counterpart. There are also five other defendants in this case who worked at Societe Generale SA and Deutsche Bank. They live in France and German. The SFO will let the court know how it intends to move forward with the charges against them in March.
Leave Sympathy Aside for Brokers in Libor Case, Prosecutor Says, Bloomberg, January 11, 2016
Trial Date Set For 6 Accused Of Interest Rate Manipulation, Value Walk, January 13, 2015
Former trader Tom Hayes’ prison sentence reduced, Marketwatch, December 21, 2015