In the first Libor-related case to go to trial in the United States, a New York jury on Thursday convicted two former Rabobank traders of rigging the key financial benchmark to boost profits on trading derivatives tied to Libor.
The case against Anthony Allen and Anthony Conti, both British citizens who worked in the Dutch bank’s London office, is part of a global investigation of Libor manipulation that has resulted in charges against 22 people in the United States and the United Kingdom. It has also led to about $9 billion in regulatory settlements with financial institutions. Libor underpins the cost of more than $350 trillion in loans and securities.
After a three-week trial, the Manhattan jury found Allen, 44, and Conti, 46, guilty of multiple counts of conspiracy and wire fraud. They face as long as 10 years in prison.
The verdict “is certain to embolden prosecutors investigating possible corruption in the currency, precious metals, and U.S. Treasury markets,” Bloomberg said, adding that “conduct some bankers once defended as routine could now land them behind bars.”
U.S. prosecutors had won $2 billion in settlements of criminal charges against banks including Rabobank, but had yet to convict any individual bankers for breaking the law.
“The [Justice] department will continue to pursue aggressively those involved in illegal schemes that undermine the integrity of financial markets,” Assistant Attorney General Bill Baer said in a news release. “And we will hold individuals criminally accountable for directing illegal corporate behavior.”
Rabobank invested in various derivatives contracts that were directly affected by Libor rates, which were calculated by the British Bankers’ Association based on submissions from a panel of banks.
Prosecutors alleged Allen, Rabobank’s former head of liquidity and finance, and Conti, a former senior trader, made Libor submissions that would benefit the bank’s derivatives trading positions at the expense of counterparties.
In 2013, Rabobank reached a $1 billion deal resolving related U.S. and European probes. Three other former Rabobank traders — Lee Stewart, Paul Robson, and Takayuki Yagami — had pleaded guilty to conspiracy. They all testified as prosecution witnesses in the Allen-Conti case.