Two former Barclays bankers have been cleared of conspiring to manipulate a key interest rate in a retrial that brings to a close the three Libor prosecutions brought by the UK’s Serious Fraud Office.
Traders Stylianos Contogoulas and Ryan Reich were unanimously acquitted by a jury at Southwark Crown Court. A jury in a separate trial last year failed to reach a verdict on the two men but convicted three of their former Barclays colleagues for conspiring to rig dollar-denominated Libor, which measures the rate at which banks can borrow from one another.
Greek-born Mr Contogoulas, 45, an ex-trader on Barclays’ swaps desk in London, was overcome by emotion and was in tears after the verdict came through on Thursday morning. Afterwards he tweeted: “Victory!!!!! The truth always wins.”
He and Mr Reich, 35, a baseball-playing US trader, had each faced one count of conspiracy to defraud with others at Barclays to manipulate the rate for more than two years until September 2007. They had denied wrongdoing.
Mr Reich was cleared by the jury on Wednesday in under four hours.
The Libor rigging scandal erupted in 2012. when Barclays paid a £290m fine over Libor rigging to US and UK authorities — the first of $9bn of Libor-related penalties paid by financial institutions.
The SFO took the lead in prosecuting individuals for allegedly seeking to nudge the daily calculation of the Libor rate in order to bolster their trading positions. The latest acquittals mean it has a mixed record. While the SFO secured the convictions of Tom Hayes, a former UBS and Citigroup trader, and four Barclays bankers last year, six inter-dealer brokers accused in a separate trial of conspiring with Mr Hayes were acquitted.
However, the acquittals do not signal the end of the benchmark-rigging saga: another SFO trial alleging six traders manipulated Euribor, the Brussels version of Libor, begins in September. The SFO has launched a fresh investigation into whether Barclays “lowballed” its Libor rate during the financial crisis, understating its borrowing costs to make the bank seem healthier and more creditworthy than it really was.
In this week’s trial, the Serious Fraud Office faced a tough task to prove its case against the men — who were not accused of conspiring together and never worked at Barclays at the same time.
The SFO argued that the two men “essentially cheated” other investors when they sought to move the Libor rate around. At the time, the rate was calculated using submissions from a panel of banks, including Barclays, and the two defendants were accused of conspiring with the employees at the bank who were directly responsible for supplying Barclays’ estimate.
Emma Deacon QC, representing the SFO, claimed that Mr Contogoulas and Mr Reich were “driven by money” to make more profit on their trading and saw “honesty and integrity” as “entirely expendable”.
The trial heard Mr Contogoulas sent messages to Peter Johnson, a Libor submitter at Barclays who was convicted last year.
Mr Contogoulas told him: “Remember when I retire and write a book about this business your name will be written in golden letters and you’ll have an open invitation to my bar in the Greek islands . . . hee, hee.” Johnson replied: “I’d prefer this not to be in any books.”
Mr Reich, who worked on the New York swaps desk, told the jury that his communications with the Libor submitters were done “openly” and he was “never in a conspiracy”.
In his closing speech, John Ryder QC, representing Mr Contogoulas, told the jury his client “was a rookie” in trading “because the vast majority of his time was spent in IT.”
Mr Ryder claimed that the trading environment was “like learning medicine from Dr Frankenstein” and “it’s not his fault he could not choose who were his tutors”.
Adrian Derbishire QC, representing Mr Reich, told the jury that in the last 10 years there had been a “radical change” in attitudes to Libor and “some of the prosecution case was based on assertions”.
The defence also attacked testimony of SFO expert witness Saul Haydon Rowe whom the court heard had been found during his evidence to be texting bankers asking for definitions of trading terms.
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