Former Barclays Employees Guilty of Libor Rigging

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Three former Barclays bank (BCS) employees have been found guilty of conspiring to manipulate a global financial benchmark used to set rates on trillions of dollars of mortgages and other loans, Britain’s Serious Fraud Office said Monday. 

The case focused on allegations the defendants colluded to rig U.S. dollar rates of Libor — the London Interbank Offered Rate — a standard that represents the rates London-based banks would lend to each other in various world currencies. Libor is among the world’s best known and widely used financial benchmarks.

Jonathan James Mathew, Jay Vijay Merchant and Alex Julian Pabon were found guilty by a Southwark Crown Court jury, capping an 11-week trial and producing a major victory for British prosecutors. However, the jurors were unable to reach verdicts for two co-defendants in the case, Stylianos Contogoulas and Ryan Michael Reich.

Merchant and Pabon were former Barclays Libor traders, while Mathew was one of the bank’s submitter’s in the daily London rate-setting process. A sixth person, Peter Charles Johnson, a senior submitter and head U.S. dollar cash trader, pleaded guilty to conspiracy to defraud in October 2014.

The group’s alleged offenses occurred between June 2005 and September 2007, British investigators charged.

“The key issue in this case was dishonesty,” David Green, director of the Serious Fraud Office, said in a statement issued with the announcement of the convictions. “By their verdicts the jury demonstrated they were sure that the conduct of three of the defendants, Jonathan Mathew, Jay Merchant and Alex Pabon was dishonest.”

Johnson, Mathew, Merchant and Pabon are scheduled for sentencing at a July 6-8 hearing. British prosecutors have 14 days from Monday to consider whether to seek a re-trial of Contogoulas and Reich.

The outcome raises to five the number of individuals convicted in British prosecutions of suspected Libor offenses. Major world banks, including Barclays, separately have paid hundreds of millions of dollars in Libor manipulation settlements.

In the highest-profile conviction to date, former Citigroup and UBS trader Tom Hayes was found guilty of Libor-related conspiracy in August 2015 at the end of a similar British court trial. He is serving an 11-year prison sentence, and has been ordered to pay a $1.24 million penalty.

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Source: USA Today | Kevin McCoy