Trader's Shaky Testimony Backfires in First U.S. Libor-Rig Trial

  • Jurors say they wanted more from men guilty of rigging Libor
  • Ex-Rabobank traders Allen, Conti may face decade in prison

Anthony Allen had at least one juror in his corner at his trial for rigging a key financial benchmark. Then he took the witness stand.

QuickTake Broken Benchmarks

The former Rabobank Groep trader struck jurors in Manhattan as evasive, deceptive and “shaky,” as one of them put it after delivering a guilty verdict. During deliberations at the high-profile trial, watched as closely in London as it was in the U.S., the juror who briefly sided with Allen changed his mind because Allen had offered a sketchy explanation for incriminating e-mails that he wrote while sitting on a London trading desk.

Anthony Allen

Photographer: Peter Foley/Bloomberg

“I was looking for something, anything from him,” Nick, a juror who asked that his last name not be used, said after rendering the verdict that could send Allen and another ex-Rabobank trader, Anthony Conti, to prison for more than a decade for manipulating Libor. He said the e-mails weren’t adequately explained. “That was huge.”

The verdict in Manhattan Thursday was just as important for U.S. prosecutors, who pledged in September to hold bankers accountable for wrongdoing. In the first U.S. trial over the London interbank offered rate -- a measure tied to more than $350 trillion in loans and securities -- jurors returned their guilty verdict after just 8 1/2 hours of deliberations, convicting Allen and Conti of conspiracy and wire fraud.

Success in a case against individuals was a key challenge for the U.S. Justice Department, which won $2 billion in criminal settlements with firms including Rabobank for gaming Libor. The verdict wrapped up a week prosecutors will long remember. On Tuesday, jurors in Chicago took little more than an hour to find Michael Coscia, the head of Panther Energy Trading LLC, guilty of spoofing, the manipulation of stock prices by placing orders without intending to trade on them.

Individual Responsibility

The Libor verdict demonstrates the U.S. Justice Department’s “ongoing efforts to hold individuals who use their corporate positions to commit fraud personally responsible for their actions,” Assistant U.S. Attorney General Leslie Caldwell said in an e-mailed statement on Thursday.

The U.S. has charged 13 people with manipulating the benchmark, which is used to determine interest rates on mortgages, commercial loans and derivatives. Four pleaded guilty. In the U.K, British prosecutors in August won the first guilty verdict at a Libor-rigging trial with the conviction of Tom Hayes, a former trader at UBS Group AG and Citigroup Inc. He was sentenced to 14 years in prison.

A second U.K. trial, in which six brokers have been accused of helping Hayes rig Libor, is under way in London. The brokers have all pleaded not guilty.

In New York, Allen and Conti, who both worked in Rabobank’s London office, were accused of joining in a four-year scheme to rig Libor. Prosecutors relied on e-mails, instant messages and recorded calls as well as testimony from three former Rabobank traders who pleaded guilty and testified for the government in exchange for leniency when they’re sentenced.

Jurors found Allen and Conti guilty on all counts. Allen was charged with one count of conspiracy and 18 counts of wire and bank fraud. Conti was charged with one count of conspiracy and seven counts of bank and wire fraud. Each charge carries a maximum sentence of 30 years in prison. They’re scheduled to be sentenced March 10.

Three jurors who were interviewed said that evidence pushed them toward a conviction, especially an e-mail in which Allen told a colleague that he was “FAST TURNING INTO YOUR LIBOR B-TCH!!!!”

Allen’s testimony -- he said he typically ignored written requests to manipulate the Libor rate or didn’t hear them when shouted -- sealed the deal. His testimony that he had “pushed back” was undercut by e-mails saying he was “glad to help,” the jurors said.

Juror’s View

Howard Wasserfall, a retired U.S. Postal worker from the New York suburbs, said he wanted Allen, who supervised the trading desk, to explain why he permitted his underlings to manipulate their Libor submissions. The rate is set daily, using data from a poll asking 16 firms to estimate how much it would cost to borrow from each other for different periods and in different currencies.

“When you’re a manager, you’re the person in charge of these people," Wasserfall said.

Nick said at first he wanted to acquit both men because he wanted more evidence from prosecutors. He reversed his stance as fellow jurors reminded him how evasive Allen appeared on the witness stand.

“I got shouted down a lot," said Nick, an editor for a legal transcription business. “When they had Allen up on the stand, I just wish he’d give us more to work with.”

"Most of us convicted him because he didn’t say ‘I was a horrible manager because I didn’t stop this,”’ Nick said. "That would’ve cut back so many guilty counts."

Allen, 44, was the global head of liquidity and finance in London. He was accused of directing some of the bank’s traders to advise Libor setters of any financial interest they had in the rate on a particular day, and seek out information that favored traders’ positions. Conti, who was the bank’s primary U.S. dollar submitter at the desk, made fraudulent Libor submissions on behalf of the bank, prosecutors said.

Testimony Backfires

Allen may have been convicted even if he, like Conti, didn’t testify. But by the end of his time in the witness box, jurors were convinced he helped others on the trading desk commit fraud.

“Allen was smart enough to know what was going on -- even when he claimed not to,” said a juror who declined to give her name.

Lawyers for both men said they will seek to reverse the convictions.

“This is round one,” said Michael Schachter, Allen’s lawyer, outside the courtroom. “We’re disappointed with the verdict but Tony looks forward to pursuing all the legal avenues and options.”

The case is U.S. v. Allen, 14-cr-00272, U.S. District Court, Southern District of New York (Manhattan).

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