Ex-Rabobank Traders Abused Libor Role, Prosecutor Tells Jury

  • First U.S. trial starts on charges of rigging benchmark rate
  • Trial in Manhattan follows seven-year global investigation

Two ex-Rabobank traders “exploited and abused” their role in setting the London interbank offered rate by manipulating the bank’s submissions to benefit themselves and colleagues, a prosecutor told jurors as the first U.S. trial over alleged Libor-rigging began.

“These men exploited and abused that role over and over again to serve their own ends,” Carol Sipperly, a federal prosecutor, said Wednesday in opening statements to the jury in Manhattan. “They with several others at Rabobank schemed to rig Libor to their own advantage to make money on the Libor interest rate swaps.”

Anthony Allen

Photographer: Peter Foley/Bloomberg

Anthony Allen and Anthony Conti, two former London-based Rabobank Groep traders, are accused of conspiring to manipulate benchmark interest rates tied to more than $350 trillion of loans and securities.

Sipperly told jurors they would see e-mails and other evidence showing the pair reacted to rigging requests from traders, as well as hear from three former colleagues, Paul Robston, Lee Stewart and Takayuki Yagami, who pleaded guilty and will testify.

Accuracy Required

Allen and Conti were required to make honest and accurate Libor submissions to the British Bankers’ Association, which oversaw the Libor rate, Sipperly said. Instead, they schemed with Rabobank cash traders who had financial positions in interest rates swaps that were affected by the Libor rate, the prosecutor said.

Anthony Conti

Photographer: Michael Nagle/Bloomberg

Lawyers for Allen and Conti told jurors the government’s case would fail because their clients had acted at all times to submit the fairest and most accurate Libor submissions with the information available to them.

Defense lawyers said their clients were charged only after the three ex-colleagues pleaded guilty and implicated others to save themselves.

Allen’s lawyer Michael Schachter said the three cooperating witnesses were swap trader who stood to benefit from rigging the Libor rate, but that his client wouldn’t have stood to gain in the scheme.

“Tony Allen never put in a false rate -- ever,” Schachter told the jury. “The evidence will show you that Tony Allen had no motive whatsoever to engage in their criminal activity.”

No Guilt

None of the prosecution’s e-mails and instant messages will show Allen engaged in the scheme, he said.

“Tony Allen took his obligation seriously and ignored these requests he got from the swap traders,” the attorney said. “The evidence will show Tony Allen made not one nickel from these swap trades.”

The trial follows a seven-year investigation and actions by regulators and enforcers to attack collusion to rig Libor.

U.S. District Judge Jed Rakoff, who is presiding over the trial, ruled earlier that prosecutors can’t tell jurors about the bank’s deferred-prosecution that prosecutors with the U.S. and $325 million payment to resolve a federal investigation.

The U.K. successfully prosecuted Tom Hayes, the former trader at UBS and Citigroup Inc. who was depicted as the ringleader of a Libor-manipulation scheme involving 25 traders and brokers from at least 10 firms.

Hayes, who was also charged in the U.S., was sentenced to 14 years in prison. A second U.K. trial, involving six brokers who allegedly conspired with Hayes, began last week in London.

The case in New York is U.S. v. Allen, 14-cr-272, U.S. District Court, Southern District of New York (Manhattan).

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