Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Former Rabobank traders face 15-count indictment in LIBOR probe, (Apr 30, 2014)

By Jeffrey May, J.D.

Three former employees of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), who traded derivatives products that referenced the Yen London InterBank Offered Rate (LIBOR), have been indicted for their roles in a scheme to manipulate the benchmark interest rate. The 15-count indictment—naming Paul Robson of the United Kingdom, Paul Thompson of Australia, and Tetsuya Motomura of Japan—was filed on April 28 (U.S. v. Robson, Criminal No. 1:14-cr-00272-JSR).

LIBOR, which is overseen by the British Bankers' Association, is calculated by averaging the interest rates that designated “Contributor Panel” banks, such as Rabobank, estimate that they can borrow unsecured funds from other banks across ten currencies, including the Japanese Yen, the government explained. A bank's submission was supposed to be an independent estimate of that bank's borrowing costs and not altered to reflect trading positions that stood to gain or lose based on LIBOR rates.

According to the indictment, the defendants, who traded derivative products whose value was tied to the Yen LIBOR, allegedly manipulated or attempted to manipulate the LIBOR benchmark interest rate for the benefit of their trading positions. The defendants allegedly engaged in wire fraud, as well as a conspiracy to commit wire fraud and bank fraud.

The indictment details communications between the defendants and employees of unnamed financial institutions that purportedly amounted to actions in furtherance of the conspiracy. The challenged conduct took place between May 2006 and early 2011. At least for portions of that time, Robson worked as a senior trader at Rabobank's Money Markets and Short Term Forwards desk in London; Thompson held a number of management positions at Rabobank and traded derivatives products that referenced Yen LIBOR; and Motomura worked as a senior trader at Rabobank's Tokyo desk.

The indictment follows a criminal complaint filed against the three defendants in January. In addition, in October 2013, Rabobank admitted its involvement in the manipulation of LIBOR by entering into a deferred prosecution agreement with the Department of Justice. The company agreed to pay a $325 million penalty under the DPA.

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