Ex-Barclays Trader Says Bosses Must’ve Known About Libor Fix

  • Jay Merchant was a promising tennis player before trading
  • Three managers earlier denied knowledge of trader requests

One of five former Barclays Plc traders accused of rigging benchmark interest rates says three of his bosses must have known that traders were making requests to fix Libor, despite the supervisors’ earlier denials of any knowledge of the rate-setting process.

Jay Merchant, 45, said at the London trial that he found it "difficult to believe" that former global head of fixed income Eric Bommensath, the investment bank’s chief operating officer Mike Bagguley and another executive, Harry Harrison, didn’t know what the swaps desk traders were doing.

Bagguley "trained me up and was making requests from my first days" on the desk, Merchant, the most senior of the accused, said Friday. Harrison "definitely knew we were doing it on a regular basis and he approved it."

All three supervisors denied any knowledge of the requests when they testified during the trial.

Prosecutors say that Merchant and four of his colleagues conspired to rig the London interbank offered rate, a benchmark tied to trillions of dollars in securities and loans.

India-born Merchant won a tennis scholarship to a U.S. college, playing to a high level before turning his back on the chance to become a professional player and heading to business school.

Merchant described Bagguley as a good friend with whom he traveled and partied regularly.

“It feels very sad that he is doing what he is doing,” Merchant said Friday, his first day of testimony. Bagguley said he was a "work acquaintance" when giving evidence April 27.

Merchant started on the euro swaps desk at Barclays in London before moving to New York at the end of 2005 to work on the dollar book. He said managers expected him to go to the U.S. and introduce the same process as in the U.K.

"Everybody knew the banks set Libor to their own commercial interests," Merchant said. The requests were part of his job, he said.

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