Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Former Rabobank employee pleads not guilty in LIBOR manipulation case, (Mar 23, 2015)

By Jeffrey May, J.D.

Anthony Allen, the former global head of liquidity and finance at Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), has pleaded not guilty to U.S. Department of Justice charges that he participated in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR). Allen, a British national who waived extradition, appeared in the federal district court in New York City on March 20 for an arraignment on charges of conspiracy to commit wire fraud and bank fraud and substantive counts of wire fraud. Allen was released on a $500,000 bond (U.S. v. Allen, Criminal No. 1:14-cr-00272-JSR).

In October 2014, Allen and another former Rabobank derivative trader—Anthony Conti—were added as defendants in a superseding indictment that also charged two other former Rabobank workers. In addition to adding as defendants Allen and Conti, the superseding indictment alleged a broader conspiracy to manipulate both the USD LIBOR and the Yen LIBOR.

According to allegations in the superseding indictment, Allen, who managed Rabobank’s money market desk in London, put in place a system in which Rabobank employees who traded in derivative products linked to USD and Yen LIBOR regularly communicated their trading positions to Rabobank’s LIBOR submitters, who submitted Rabobank’s LIBOR contributions to the British Bankers’ Association (BBA) trade association. Allen occasionally acted as Rabobank’s backup USD and Yen LIBOR submitter. He also served on a BBA Steering Committee that provided the BBA with advice on the calculation of LIBOR as well as recommendations concerning which financial institutions should sit on the LIBOR contributor panel, according to the Justice Department. Conti, who was based in London and Utrecht, Netherlands, served as Rabobank’s primary USD LIBOR submitter and at times acted as Rabobank’s back-up Yen LIBOR submitter, the Justice Department alleged.

The indictment also charged Tetsuya Motomur of Japan and Paul Thompson of Australia. These two individuals were named, along with Paul Robson, a U.K. citizen, in an earlier indictment. Robson has since pleaded guilty to one count (a conspiracy count) of the 15-count indictment. Robson had worked as a senior trader at Rabobank’s Money Markets and Short Term Forwards desk in London and also served as Rabobank’s primary submitter of Yen LIBOR.

Robson's plea followed a guilty plea to one count of conspiracy to commit wire fraud and bank fraud by another former Rabobank employee and Japanese national—Takayuki Yagami. Yagami, a Japanese Yen derivatives trader for Rabobank, pleaded guilty to one count of conspiracy to commit wire fraud and bank fraud in June 2014.

Motomura, Thompson, Yagami and other traders entered into derivative contracts containing USD or Yen LIBOR as a price component and they asked Conti, Robson, Allen and others to submit LIBOR contributions consistent with the traders’ or the bank’s financial interests, to benefit the traders’ or the banks’ trading positions, according to the charges.

Trial in the case is set for October, according to a Justice Department announcement.

Deferred prosecution agreement. Rabobank has settled charges against the company related to the investigation. The company reached a deferred prosecution agreement with the Department of Justice in 2013. It agreed to pay a penalty of $325 million to resolve the bank’s LIBOR submission violations. The bank has also agreed to pay $475 million to settle charges with the Commodity Futures Trading Commission, and has reached similar settlements with the Dutch Public Prosecutor’s Office and the U.K. Financial Conduct Authority.

Companies: Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.; British Bankers’ Assn.

News: Antitrust AntitrustDivisionNews