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Date: 2024-03-03 Page is: DBtxt003.php txt00021503
BANKING
THE BARCLAYS LIBOR RIGGING SCANDAL

Libor-rigging scandal: three former Barclays traders found guilty


Former Barclay’s trader Jay Merchant ... The former Barclays trader Jay Merchant, pictured outside Southwark crown court, earned £2.2m in pay and bonuses for 2007. Photograph: Matt Dunham/AP

Original article: https://www.theguardian.com/business/2016/jul/04/libor-rigging-scandal-three-former-barclays-traders-found-guilty
Burgess COMMENTARY
I am a reasonably well informed ordinary person but not an expert in either law or finance. I am bothered by what seems to be an unhealthy focus on making profit in the banking and finance industry no matter what the rules and no matter what the damage to society. But worse, I am bothered that while bad behavior may result in prison time, the time seems to be quite modest relative to some of the punishment that is meted out quite routinely for very minor offenses if you are poor and non-white! And worse again, when a white collar crime results in huge wealth accumulation, it seems that the offender gets to keep the ill-gotten gains. The idea that the same system of justice applies to all seems to be missing in all of this ... and doing something meaningful to change this for the better seems to moving at snail pace ... if at all.
Peter Burgess
Libor-rigging scandal: three former Barclays traders found guilty

Victory for Serious Fraud Office as trio convicted of conspiring to fraudulently manipulate global benchmark interest rates


Written by Simon Bowers @sbowers00 ... The Guardian

Mon 4 Jul 2016 14.15 EDT ... Accessed January 2022

A multimillionaire former star trader at Barclays is expected to receive a prison sentence, along with three former colleagues, after being in a transatlantic plot to manipulate Libor interest rates a decade ago.

During a three-month trial at Southwark crown court, the ex-bankers gave various explanations for their behaviour: they did not believe it to be dishonest, their bosses condoned it and some had been subjected to intimidation. However, the jury found that Jay Merchant and his co-conspirators had knowingly tried to fix rates in an effort to help the bank make money on its own trades.

The convictions are a major victory for the Serious Fraud Office, which has been pursuing investigations into the Libor scandal for four years. Before this trial, the SFO’s only successful prosecution was that of the former UBS and Citigroup trader Tom Hayes. He was, reduced on appeal to 11 years, but all six of his in January.

The verdicts will be closely watched by other former Barclays bankers, as the SFO is still pursuing investigations into two more alleged Libor-fixing conspiracies.

Merchant and nine other highly paid investment bankers, working at Barclays’ offices in London and New York, were accused in court of conspiring to fix the rate, though criminal charges were only brought against six men.

Merchant, Alex Pabon and Jonathan Mathew were found guilty of conspiracy to defraud at Southwark crown court last week. The judge did not permit reporting of their verdicts until Monday.

The jury failed to reach verdicts on two other defendants and prosecutors have two weeks to decide whether to seek a retrial. A sixth banker, Peter Johnson, had already pleaded guilty.

Merchant, 45, a graduate of Stern business school in New York, who has Indian and British nationality, worked for Barclays in London and later in New York, earning £2.2m in pay and bonuses for 2007. Before his career in banking, Merchant had been one of India’s top tennis players.

During the trial, he had claimed that many of his colleagues knew that banks acted in their commercial interest when making their daily submissions to the Libor-setting process.

Merchant said Eric Bommensath, a former co-head of Barclays investment bank, was one of those who knew about the practice. However, from the witness box, Bommensath told the court that he had known nothing of how the bank’s Libor submissions were arrived at.

Under cross-examination, Bommensath was shown emails copied to him and other Barclays chiefs about Libor. “Libors are not reflecting the true cost of money. The true cost of money is anything from 5 to 15 basis points higher,” one said.

Another email read: “Fun and games in Libor land. Just for your guidance I do not think I am setting Libors high enough.”

Bommensath explained that he was based in New York and was not running the part of the bank that dealt with Libor. He denied knowing about the practices and prosecutors have never accused him of involvement in, or knowledge of, the plot.

In a statement issued after the jury was discharged, the SFO director, David Green QC, said: “The trial in this country of American nationals demonstrates the extent to which the response to Libor manipulation has been international and the subject of extensive cooperation between US and UK authorities.”

Andrew Tyrie MP, who chairs the Treasury select committee, said: “These convictions, which take place under the law that existed prior to the Libor scandal, should themselves act as a deterrent.

“The regulators are now armed by parliament with far more stringent powers and penalties. Those who might be tempted into wrongdoing need to know that these new sanctions are available and parliament will expect the regulator to use them rigorously.”

Merchant, Johnson, Pabon and Mathew will be sentenced later this week.

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