Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Second former Rabobank trader pleads guilty to role in LIBOR conspiracy, (Aug 19, 2014)

By Jeffrey May, J.D.

A former employee of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), who traded derivatives products that referenced the Yen London InterBank Offered Rate (LIBOR), has pleaded guilty for his role in a conspiracy to commit wire and bank fraud by manipulating Rabobank’s Yen LIBOR submissions to benefit trading positions. Paul Robson pleaded guilty to count one (conspiracy) of a 15-count indictment returned by a federal grand jury in the Southern District of New York on April 28 (U.S. v. Robson, Criminal No. 1:14-cr-00272-JSR).

The Department of Justice announced yesterday that Robson, a citizen of the United Kingdom who 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, pleaded guilty to involvement in the conspiracy. Robson's plea followed a guilty plea to one count of conspiracy to commit wire fraud and bank fraud by another former Rabobank employee—Takayuki Yagami—in June. In the original indictment, Yagami, a Japanese national, was identified only as Trader-R.

According to the Justice Department's charges, Yagami and Robson, as well as Paul Thompson and Tetsuya Motomura, traded in derivative products that referenced Yen LIBOR, an average interest rate calculated based on submissions from banks across the globe. The court filings alleged that these four former Rabobank employees agreed to make false and fraudulent Yen LIBOR submissions for the benefit of their trading positions. Robson’s main role in the conspiracy was to submit Yen LIBOR rates at the requests of traders—including Thompson, Motomura, and Yagami—who entered into derivatives contracts containing Yen LIBOR as a price component, the Justice Department reported.

LIBOR, which serves as the primary benchmark for short-term interest rates, is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks, according to the Justice Department. The published LIBOR “fix” for Yen LIBOR at a specific maturity is the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank.

Rabobank reached a deferred prosecution agreement with the Department of Justice in 2013, agreeing 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.

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