Ex-Rabobank Traders Call Libor-Rigging Evidence Tainted

  • New York judge's ruling may have far-reaching consequences
  • Compelled testimony was used to convict traders in U.S.

Two former Rabobank Groep traders are seeking to have their Libor-rigging convictions overturned by a New York judge whose decision could have far-reaching ramifications for U.S. prosecutors probing cross-border financial crimes.

U.S. District Judge Jed Rakoff has been asked to issue the first ruling in what is likely to be a recurring legal question: whether American prosecutors can rely on evidence gathered overseas in a manner that would violate U.S. laws.

Anthony Allen and Anthony Conti were convicted last month of rigging the London interbank offered rate to benefit their trading positions and those of their colleagues in the first such case brought by the U.S. government. The defendants argued the prosecution was tainted because of testimony by the government’s star witness, Paul Robson, who had read 300 pages of statements they were required to give U.K. investigators in a parallel investigation in London.

Defendants in the U.S. couldn’t be forced to give such statements because of the constitutional right against self-incrimination that includes refusing to speak with investigators.

Robson Testifies

Robson, a former colleague of Allen and Conti, said at Wednesday’s hearing that what he told the jury was based on first-hand knowledge and not on what he read in their statements.

“My testimony was based on what I’d lived through,” Robson said. “It was based upon my observations, personal experience and my understanding of terminology of the market.”

Robson is one of three former traders who struck deals with the U.S. in exchange for testifying against Allen and Conti.

The jury verdict finding the two traders guilty was seen as emboldening prosecutors who are investigating possible corruption in the currency, precious metals and U.S. treasury markets. And after a London judge sentenced Tom Hayes, a former trader at UBS Group AG and Citigroup Inc., to a 14-year prison term for rigging Libor, bankers who saw such conduct as routine may now end up behind bars.

Prosecutors argued to Rakoff that ruling for the defendants could cripple some cross-border investigations. They said foreign governments seeking to block U.S. probes might seek to compel testimony and make that evidence public so the U.S. would have a harder time building cases.

The hearing will continue Thursday.

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

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