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Monday
Mar142016

U.S. jails two former Rabobank traders for rigging LIBOR

Two UK citizens and former derivatives traders at Rabobank were sentenced to U.S. prison Thursday 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 24 months 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. 

A jury convicted them in November 2015 after a four-week trial. 

Allen was found guilty of one count of conspiracy to commit wire fraud and bank fraud and 18 counts of wire fraud. 

Conti was found guilty of one count of conspiracy to commit wire fraud and bank fraud and eight counts of wire fraud.

LIBOR -- the London Interbank Offered Rate -- 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.

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

Rabobank Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. is based in the Netherlands.

At the time of the offenses, Rabobank was one of 16 banks that made submissions to the London-based British Bankers’ Association to calculate LIBOR for 10 currencies at 15 maturities, ranging from overnight to one year.

Allen and Conti were key players a scheme to rig the U.S. Dollar and Japanese Yen LIBORs to benefit their own trading positions and those of colleagues, the DOJ said Thursday.

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.

Stewart, 52, a former derivatives trader in London, testified against Allen and Conti. He told the jury he often asked Conti to make U.S. Dollar LIBOR submissions that would help Stewart make money on trades.

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

“Allen and Conti were entrusted to set LIBOR, a critically important interest rate benchmark,” the DOJ's Leslie Caldwell said Thursday.

“Their scheme to manipulate this rate to increase their bank's profits undermined the integrity of our financial markets and the public's confidence in the fairness of the financial system." 

The FBI led the U.S. investigation of Rabobank. It worked with the Dutch Public Prosecution Service and the Dutch Central Bank, the DOJ said.

In the UK, the Serious Fraud Office has charged 19 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.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.