Ex-Rabobank Trader Stewart Avoids Prison in Libor Rigging

Updated on
  • Judge’s sentence is time served based on probe cooperation
  • Derivatives traders worked to sway benchmark borrowing rate

A former derivatives trader for Rabobank Groep avoided prison at his sentencing Tuesday in Manhattan, after pleading guilty to participating in a scheme to rig the Libor rate benchmark and testifying against his colleagues at trial.

Lee Stewart, a 53-year-old former derivatives trader, could have faced more than three years in prison for his role in the scheme, but the government recommended leniency in exchange for admitting his role and testifying at the trial of fellow traders Anthony Conti and Anthony Allen. Both were convicted; Allen got two years in prison and Conti got one year.

"I’d just like to apologize for my terrible behavior and I hope to be a better person going forward," Stewart told U.S. District Judge Jed Rakoff.

Rakoff sentenced Stewart to time served and imposed a two-year term during which he must continue cooperating with the government’s investigation of rate manipulation.

Stewart was a senior trader based in London, dealing in U.S. dollar-denominated interest rate swaps tied to Libor. He admitted conspiring with others to submit false rates that would benefit the bank’s trading positions, rather than a true estimate of the bank’s borrowing costs. He came under suspicion years after he had left the bank, resigning in 2009 to care for his ailing father.

During the trial, Stewart testified that he and other traders regularly asked Conti and Allen to alter their rate submissions to the British Bankers Association to suit their market positions, and that Conti did so. He also admitted lying when he was first questioned. In addition to testifying, Stewart participated in several sessions with prosecutors in which he explained how the scheme worked and walked authorities through trading data, audio recordings and records of electronic chats.

QuickTake: Broken Benchmarks

He waived extradition to the U.S. and pleaded guilty in March 2015; his colleagues were convicted in November of that year. The government also credited Stewart’s guilty plea with likely influencing other defendants in the case to plead guilty as well.

Stewart works as a self-employed construction consultant in the U.K.

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

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