Antitrust Law Daily Wrap Up, TOP STORY: LIBOR probe nets two more former Rabobank employees, (Oct 17, 2014)

By Jeffrey May, J.D.

A total of six former employees of Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) have now been charged by the Department of Justice for their alleged roles in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR). Yesterday, two former Rabobank derivative traders who are British nationals—Anthony Allen and Anthony Conti—were named in a superseding indictment that also charges two other former Rabobank workers. In addition to adding Allen and Conti as defendants, the superseding indictment alleges a broader conspiracy to manipulate both the USD LIBOR and the Yen LIBOR (U.S. v. Allen, Criminal No. 1:14-cr-00272-JSR).

A federal grand jury in the Southern District of New York on October 16 returned a superseding indictment, charging Allen and Conti with conspiracy to commit wire fraud and bank fraud and with substantive counts of wire fraud for their participation in a scheme to manipulate the USD and Yen LIBOR rate in a manner that benefitted their own or Rabobank’s financial positions in derivatives that were linked to those benchmarks. According to allegations in the superseding indictment, Allen, who was Rabobank’s Global Head of Liquidity & Finance and the manager of the company’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 trade association. In addition to supervising the desk in London and money market trading worldwide, 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 alleges.

The indictment also charges Tetsuya Motomur of Japan and Paul Thompson of Australia. These two individuals were named, along with U.K. citizen Paul Robson, 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.

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.

Deferred prosecution agreement. 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.

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

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