By Edward L. Puzzo, J.D.
Two former derivatives traders at Rabobank Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank)—Anthony Allen and Anthony Conti—were sentenced to prison yesterday for manipulating the London Interbank Offered Rates (LIBOR) for the U.S. Dollar (USD) and Japanese Yen (JPY), benchmark interest rates to which trillions of dollars in interest rate contracts were tied, the Department of Justice has announced.
U.S. District Judge Jed S. Rakoff, of the U.S. District Court for the Southern District of New York, sentenced Allen, the bank’s former global head of liquidity and finance in London, to 24 months in prison, and sentenced Conti, a former senior trader on the bank’s money markets desk in London, to 12 months and one day in prison.
On November 5, 2015, Allen had been found guilty of one count of conspiracy to commit wire fraud and bank fraud and 18 counts of wire fraud; Conti had been found guilty of one count of conspiracy to commit wire fraud and bank fraud and eight counts of wire fraud. The evidence at trial showed that the defendants actively participated in a scheme to rig the USD and JPY LIBORs to benefit their own trading positions, as well as those of their colleagues. Specifically, between 2005 and 2009, the evidence showed that Allen oversaw a system in which Rabobank employees who traded LIBOR-linked derivatives made improper requests to the employees who submitted Rabobank’s LIBOR contributions to the British Bankers’ Association (BBA). Conti was the primary USD LIBOR submitter and Paul Robson, who previously pleaded guilty to the conspiracy charge, was the primary JPY LIBOR submitter.
In addition to Allen, Conti, and Robson, two other former Rabobank employees have been convicted in the Rabobank LIBOR investigation. Lee Stewart and Takayuki Yagami each pleaded guilty to one count of conspiracy in connection with their roles in the scheme. Two other former Rabobank employees, Tetsuya Motomura of Tokyo, and Paul Thompson of Dalkeith, Australia, have also been charged and are awaiting trial. Rabobank entered into a deferred prosecution agreement with the department on Oct. 29, 2013, and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.
“Large banks, like other companies, only conspire and commit fraud through their executives,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “The Department of Justice will continue to hold those executives accountable for their role in corporate wrongdoing. Working with our partners at the Criminal Division and FBI, the Antitrust Division will continue to target fraud and collusion to ensure that markets function as they should—freely, fairly, and competitively.”
LIBOR is the primary benchmark for short-term interest rates for several currencies around the world and is used as a reference rate for many financial products, including interest rate contracts, mortgages, credit cards, and student loans. At the time relevant to the charges, LIBOR was calculated for 10 currencies at 15 maturities, ranging from overnight to one year, and was published by the British Bankers’ Association (BBA), a London-based trade association, based on submissions from a panel of 16 banks, including Rabobank.
Companies: Rabobank Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.
MainStory: TopStory Antitrust AntitrustDivisionNews
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