Ex-Deutsche Bank Trader Pleads Not Guilty in Libor Case

  • Gavin Black waived extradition in U.S. benchmark rigging case
  • Black charged by U.S. in June with manipulating Libor

A former London-based Deutsche Bank AG trader pleaded not guilty Thursday to U.S. charges he manipulated a benchmark interest rate that is not only tied to trillions of dollars in securities and loans but is also the focus of government investigations worldwide into bank misconduct.

Gavin Black, who was a director on the bank’s money market derivatives and pool trading desks in London from 1997 until early 2015, made a preliminary appearance in Manhattan federal court after agreeing not to fight extradition from the U.K. He was released on $500,000 bond by U.S. District Judge Colleen McMahon, who’s presiding over the case. His travel is restricted to the U.S., U.K., and New Zealand.

Black and Matthew Connolly, who was a supervisor in New York, were charged in June with rigging the rate, according to a revised U.S. indictment filed last month. Connolly has denied wrongdoing. Both men are accused of conspiring to manipulate the London interbank offered rate, or Libor, in a scheme that ran from 2004 to at least 2011. More than a half dozen others at the bank, including managing directors and a vice president, on desks that spanned Europe, North America and Asia, participated in the plot.

Prosecutors say they were aided by another former colleague, Timothy Parietti, who served as a managing director of the bank’s money markets derivatives trading desk in Manhattan from January 2005 to December 2012. Parietti secretly pleaded guilty on May 26 to conspiring to rig Libor during a two-year period. He’s cooperating with the U.S., according to a transcript of his plea that was later unsealed.

The daily Libor rate was set by a panel of 16 banks based on submissions that were supposed to reflect borrowing rates in the interbank market. It was calculated by averaging the middle eight submissions. The U.S. has alleged the traders manipulated their bank’s submissions to increase the profitability of their trading positions.

The U.S. Libor probe has now led to charges against more than a dozen bankers and brokers. Of those, two former Rabobank Groep traders were convicted at trial while others -- including three from Rabobank and one from Deutsche Bank -- pleaded guilty.

The case is U.S. v. Connolly, 16-cr-00370, U.S. District Court, Southern District of New York (Manhattan).

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