Three former Barclays traders have been found guilty by a London jury of conspiring to fraudulently manipulate global benchmark interest rates in a stark warning to junior bankers and a major victory for Britain’s Serious Fraud Office (SFO).
The verdicts bring to five the number of people convicted in London for being part of a global financial conspiracy that has forced banks to pay fines of $9bn, discredited rates like Libor and helped shred public faith in the banking industry.
Calcutta-born, US-based Jay Merchant, 45, the most senior of the men on trial, was convicted unanimously.
British former Libor submitter Jonathan Mathew, 35, and former trader Alex Pabon, a 38-year-old American, were found guilty by a majority verdict after a 10-week trial.
A second Libor submitter, 61-year-old Peter Johnson, had pleaded guilty in October 2014.
The four men are expected to be sentenced at London’s Southwark Crown Court later this week.
Reporting restrictions on the verdicts were lifted yesterday after the jury failed to reach a verdict on two other defendants, 44-year-old Greek-born Stylianos Contogoulas and American Ryan Reich, 34.
The SFO now has 14 days to decide whether it will seek a fresh trial for the two.
The verdicts come four years after Barclays became the first of 11 powerful banks and brokerages to be handed a hefty fine over rate fixing allegations, sparking a political and public backlash that forced out charismatic former CEO Bob Diamond, an overhaul of Libor rules and the criminal inquiry.
The verdict represented a victory for the SFO, which has had a mixed record on successfully prosecuting white collar criminals, and whose head David Green has staked his reputation on the costly and high-profile Libor prosecutions.
“The key issue in this case was dishonesty,” Green said in a statement.
“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.”
A spokesman for Barclays declined to comment.
The SFO secured its first Libor conviction when Tom Hayes, a former UBS and Citigroup trader, became the first man found guilty by a jury for his role in the Libor scandal last August. He is serving an 11-year jail sentence after his original 14-year sentence was reduced on appeal.
But the agency suffered a blow when prosecutors failed to persuade a jury that six former brokers conspired with him to rig Libor.
The brokers were all cleared in January.
Merchant, the most senior banker on trial, and junior bankers Mathew and Pabon denied one count of dishonestly skewing Libor, a benchmark for rates on about $450tn of contracts and loans worldwide, to defraud others and make more money for themselves and Barclays between June 2005 and September 2007.
The men told the court their bosses sanctioned communications on Libor rates, that they sent emailed Libor requests over corporate message systems in full view of compliance staff and that such rates commonly reflected banks’ derivatives positions at the time.
Mathew, partially deaf since childhood and dyslexic, hung his head in the dock while his wife wept in the visitor gallery.
Merchant shook his head in disbelief while his elderly father looked stunned as a silence fell over the courtroom while the verdicts were read out.
Prosecutors said the men plotted with Johnson and others at Barclays to rig Libor, the London interbank offered rate, driven by greed.
Libor was designed to reflect the estimated rate at which banks could borrow funds from each other.
New York-based former dollar swaps traders Merchant and Pabon sent scores of emails to Libor submitters Johnson and Mathew to request Libor rates to suit their trading book.
Pabon, who left Barclays and banking in 2006, said he had been instructed by Merchant to send Libor requests to London.
He said he did not think it was wrong and said senior staff did not tolerate dissent and juniors were expected to follow orders.
Mathew, who submitted dollar Libor rates only when Johnson was away, told the court he initially lied to investigating US authorities in 2010 about whether he took trader requests into account when choosing the bank’s Libor rate because he had been afraid of Johnson and of losing his job.