|
 Jury selection is scheduled for Tuesday in Manhattan federal court
in the case of Anthony Allen, 44, and Anthony Conti, 46, who are
accused of helping manipulate interest rates to benefit the Dutch
lender's trading positions.
The case is the first by the U.S. Justice Department to go to trial
over allegations that financial institutions manipulated Libor, or
the London interbank offered rate, a short-term rate banks charge
each other for loans.
The rate, which was overseen by the British Bankers' Association (BBA),
is calculated based on submissions by a panel of banks. It underpins
$450 trillion of financial products globally from mortgages to
credit card loans.
U.S. and European authorities have been investigating whether banks
fraudulently submitted artificial rate estimates to the association
to bolster their profits on trading derivatives linked to Libor.
Those investigations have resulted in charges against 22 people in
the United States and United Kingdom and around $9 billion in
regulatory settlements with financial institutions.
Those banks include Netherlands-based Rabobank, which as part of a
$1 billion deal resolving U.S. and European Libor-related probes
agreed in 2013 to pay $325 million as part of a deferred prosecution
agreement with the Justice Department.
Allen, Rabobank's former global head of liquidity and finance, and
Conti, a senior trader, were indicted in the United States in
October 2014.
The indictment accuses Allen, who supervised Rabobank's Libor
submission process, of directing the bank's traders to advise those
who made its Libor submissions about any financial interest they had
in the rate.
Prosecutors contend that rate submitters, who included Allen, were
meanwhile told to make U.S. dollar and yen Libor submissions that
favored the traders' positions.
Prosecutors allege that Conti frequently accommodated the traders'
requests, in communications captured in emails and chat logs.
On Aug. 13, 2007, for example, a New York-based Rabobank trader
asked Conti where he expected the six-month Libor rate to be set the
next day. According to the indictment, Conti replied, "where do you
like to see it, is more the question?"
Allen and Conti, both UK citizens, earlier this year pleaded not
guilty after the two men became the first of 13 people charged by
the Justice Department in the probe to waive their right to
extradition to fight the charges in the United States.
[to top of second column] |
Their trial follows an earlier one in London involving yen Libor
manipulation that led to the conviction of Tom Hayes, a former UBS
AG and Citigroup Inc trader who was sentenced in August to 14 years
in prison.
Another trial in London kicked off this week for six former brokers
accused of manipulating yen Libor rates. They have pleaded not
guilty.
In the trial of the two ex-Rabobank traders, U.S. prosecutors are
expected to call as witnesses as many as three former Rabobank
employees who pleaded guilty and agreed to cooperate in the
investigation.
Lawyers for Allen and Conti have indicated in court that they plan
to argue that the BBA was actually aware that Libor submissions
sometimes reflected the banks' financial interests, a fact they say
a range of market participants knew about.
They also have indicated they intend to argue that Rabobank's Libor
submissions were within the range of those of other banks and hence
were not objectively false.
They have also complained that the decision to charge the British
citizens in the United States was unfair, given that their alleged
conduct took place in the United Kingdom.
"The great injustice, your honor, is that everything in this case
has to do with the United Kingdom," Michael Schachter, Allen's
lawyer, said in court in August. "This case has nothing to do with
the United States whatsoever."
Prosecutors have countered that the Libor scandal affected markets
and Rabobank's counter-parties around the world, including in the
United States.
The case is U.S. v. Allen, U.S. District Court, Southern District of
New York, No. 14-cr-00272.
(Reporting by Nate Raymond in New York; Editing by Christian Plumb)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
