markets

Jailed Barclays Trader Must Pay $400,000 From Libor Profits

Updated on
  • Jay Merchant serving 5 1/2 year sentence for rigging Libor
  • Merchant pays more than other Barclays traders combined

A former Barclays Plc trader, who is serving a 5 1/2 year prison sentence for rigging Libor, must pay back nearly 300,000 pounds ($400,000) in profits and legal costs that were considered proceeds from the crime.

Jay Merchant, 47, reached a deal with prosecutors where he will pay 275,890 pounds in so-called confiscation and an additional 21,961 pounds in legal fees. The agreement with the Serious Fraud Office was disclosed at a London court hearing Tuesday.

Jay Merchant

Photographer: Simon Dawson/Bloomberg

Merchant was one of four former Barclays traders sent to prison in 2016 for manipulating the London Interbank Offered Rate, known as Libor, used to value trillions of dollars of securities. He was sentenced to 6 1/2 years, which was reduced by a year on appeal. The Libor scandal was a global investigation that saw a dozen firms pay about $9 billion in fines.

Merchant’s lawyer, Hannah Raphael, said that the settlement doesn’t mean that her client profited from Libor submissions.

“As he has consistently maintained throughout these proceedings, Mr. Merchant made no direct financial gain in respect of the conduct alleged against him," Raphael, a lawyer at BCL Solicitors, said in a statement.

Merchant, who received the longest sentence of the Barclays group, also has to pay the most money. He was the best paid of all the defendants, making 2.2 million pounds in 2007, a London jury heard at trial.

Two more junior traders, Alex Pabon and Jonathan Mathew, were ordered to pay 2,300 pounds and 34,700 pounds, respectively, earlier this year. Peter Johnson, another senior Barclays trader who pleaded guilty and was sentenced to 4 years in prison, was forced to pay 144,501 pounds in confiscation and costs.

Merchant has 14 days to surrender the money.

Merchant’s confiscation is the second-highest emanating from the U.K. investigation. Former UBS Group AG trader Tom Hayes, the first person to be jailed for the offense and serving 11 years in prison, was ordered to pay 880,000 pounds in March 2016. In October, Hayes was granted permission by a London court to appeal part of the order related to the family’s 1.9 million-pound home.

A number of the Libor traders have sought to appeal their convictions. Pabon, who was released from prison earlier this year, is awaiting a judgment from the Court of Appeal, on whether his conviction should be overturned because an SFO witness has been discredited.

Hayes and Mathew have both exhausted the available court appeals and referred their cases to the Criminal Cases Review Commission -- an organization set up to investigate suspected miscarriages of justice. Raphael said Tuesday Merchant is also planning to refer his case to the CCRC.

In his testimony at trial, Merchant said "everybody knew" banks set Libor according to their own commercial interests and "it was completely open from the day I joined" the desk.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE