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 The Serious Fraud Office (SFO) charged three former traders at
British bank Barclays <BARC.L> — director of dollar fixed-income
swaps Jay Merchant and dollar interest rate derivative traders Alex Pabon and Ryan Reich — with conspiracy to defraud in connection with
its Libor inquiry.
A provisional hearing has been scheduled for the three men, who the
SFO confirmed were currently in the United States, at Westminster
Magistrates Court in London on May 27.
Lawyers for Reich and Merchant, Ben Rose of Hickman and Rose and
Brian Spiro of BCL Burton Copeland, respectively, said their clients
refuted any allegations of wrongdoing.
"He (Reich) is not guilty of this offence and will vigorously
contest these allegations at his forthcoming trial," Reich's lawyer
said in an emailed statement.
Merchant's lawyer said: "Should this matter proceed, he (Jay
Merchant) has no doubt that he will be fully vindicated and it will
be shown that he acted at all times in a right and proper manner."
Pabon's London lawyer was not immediately available for comment.
The charges could prompt the first extradition to Britain from the
U.S. in the lengthy investigation into the alleged rigging of Libor
(London interbank offered rate), a central cog in the global
financial system.
The SFO, which has now charged 12 in connection with its criminal
Libor investigation, declined to comment on any extradition request
or give further details about the charges.
The investigation into benchmark interest rates has been
overshadowed by a parallel inquiry into allegations of
foreign-exchange market rigging, which on March 5 reached into the
heart of London's financial establishment when the Bank of England
suspended a staff member.
However, the inquiry into alleged fixing of Libor and related
Euribor rates, against which around $450 trillion of financial
contracts from derivatives to consumer loans are priced, has so far
seen U.S. and European authorities fine 10 banks and brokerages $6
billion and charge 16 men.
The SFO in February charged three former London-based Barclays Libor
submitters — Peter Johnson, Jonathan Mathew and Stylianos
Contogoulas — over a two-year scheme to rig rates and in March
charged three former ICAP <IAP.L> brokers with fraud-related Libor
offences.
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SETTLEMENT
Barclays was the first bank to settle U.S. and UK regulatory
allegations of rate manipulation, paying around $450 million in
fines in 2012. But even regulators admitted privately they were
taken aback by an ensuing public and political backlash, which
forced out four top Barclays directors, sparked a fraud squad probe
and several parliamentary reviews.
In their case to date against former London-based Barclays traders
already charged, SFO lawyers have said they have sifted through
"vast amounts" of documents, adding that much of the evidence
against Johnson, Mathew and Contogoulas was in email form.
The three men, who are next expected to appear in court towards the
end of July, are the first to face charges for the alleged
manipulation of the U.S. dollar-denominated Libor rate. Ten other
men face U.S. and UK criminal charges for manipulating
yen-denominated Libor.
The SFO has already charged three other men as part of its Libor
investigation, including Tom Hayes, a former yen derivatives trader
at UBS <UBSN.VX> and Citigroup <C.N>, who pleaded not guilty in
December.
Hayes is due to stand trial in January 2015 on eight charges of
conspiring with staff from at least 10 major banks and brokerages to
manipulate yen Libor rates between 2006 and 2010.
Terry Farr and James Gilmour, two brokers from RP Martin, have been
charged and pleaded not guilty to similar fraud-related offences.
Their trial has been scheduled for September 2015, in part to allow
the SFO time to bring charges against further alleged
co-conspirators.
(Editing by Erica Billingham)
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