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LIBOR traders and submitters found guilty

4 July, 2016 | News Releases

Three former employees of Barclays Bank plc have been convicted by a jury at Southwark Crown Court of conspiracy to defraud in connection with an SFO investigation into the manipulation of US Dollar LIBOR.

Jonathan James Mathew, Jay Vijay Merchant and Alex Julian Pabon were convicted by a jury after an 11-week trial. The jury could not reach verdicts for two of their co-defendants, Stylianos Contogoulas and Ryan Michael Reich.

Whilst employed by Barclays, the convicted defendants conspired with each other and other individuals to procure or make submissions of rates into the US Dollar LIBOR setting process, thereby intending to prejudice the economic interests of others.

Merchant and Pabon were both LIBOR traders, while Mathew was a submitter. A sixth individual, Peter Charles Johnson, a senior submitter and head US Dollar cash trader, pleaded guilty to conspiracy to defraud in October 2014. Their offences took place between June 2005 and September 2007.

Commenting on the verdict, Director of the SFO David Green CB QC, said:

“The key issue in this case was dishonesty.  By their verdicts the jury demonstrated they were sure that the conduct of three of the defendants, Jonathan Mathew, Jay Merchant and Alex Pabon was dishonest.  Senior LIBOR submitter Peter Johnson accepted he had been dishonest when he pleaded guilty to the offence in October 2014.

The trial in this country of American nationals also demonstrates the extent to which the response to LIBOR manipulation has been international and the subject of extensive cooperation between US and UK authorities.”

The convicted defendants dishonestly submitted rates specifically intended to advantage Barclays and themselves financially and to defraud those with whom they were trading.

Johnson, Mathew, Merchant and Pabon will be sentenced at a hearing on 6-7 July 2016.

The SFO has 14 days from today in which to consider whether to seek a re-trial of Contogoulas and Reich.

This brings to five the number of convictions as a result of the SFO’s investigation. Tom Hayes was convicted in August 2015 and is serving an 11 year prison sentence.  Six other defendants were acquitted of charges against them in January 2016 in the second LIBOR trial. A total of 19 individuals have been charged so far. Requisition Notices ie criminal proceedings have been issued to a further 5 people, who are currently resident abroad.

The SFO’s LIBOR investigation continues – six individuals await trial for the alleged manipulation of EURIBOR on 4 September 2017.

LIBOR – the London Interbank Offered Rate – is the global benchmark interest rate used to set a range of financial deals. It underpins trillions of pounds of investments and contracts both in the UK and around the world including influencing the interest rate that banks charge their mortgage or loan customers.  The accuracy of the rate is important to maintaining trust in the financial system 

The SFO would like to thank the Financial Conduct Authority, US Department of Justice, US Commodity Futures Trading Commission and other law enforcement partners for the significant assistance provided in connection with this investigation.

 

Notes to editors:

1.    SFO Director David Green accepted the LIBOR matter for investigation on 6 July 2012, reversing a decision by his predecessor.

2.    Peter Charles Johnson (61), Jonathan James Mathew (35) and Stylianos Contogoulas (44) were charged with conspiracy to defraud in March 2014. Vijay Merchant (45), Alex Julian Pabon (38) and Ryan Michael Reich (34) were charged in April 2014. The press releases issued at the time of the charges can be found here and here.

3.    The jury reached a unanimous verdict for Merchant and majority verdicts of 11-1 and 10-2 for Mathew and Pabon respectively.

4.    Details of Peter Johnson’s guilty plea in October 2014 can be found here. A court order restricting the identifying of Johnson was lifted in May 2016.

5.    The Financial Services Act 2012 came into effect on 1 April 2013, making the administration of LIBOR a regulated activity overseen by the Financial Conduct Authority. The Act, which was not retrospective, made knowingly or deliberately making false or misleading statements in relation to benchmark-setting a criminal offence.

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