The Serious Fraud Office (SFO) has secured a major win today (4 July) after three former Barclays traders were found guilty by a London jury of conspiring to fraudulently manipulate global benchmark interest rates.
In a warning to junior bankers, Jay Merchant was convicted unanimously at Southwark Crown Court of manipulating the key financial rate while Jonathan Mathew and Alex Pabon were found guilty by majority verdict after a ten-week trial. The trio will be sentenced on Thursday.
However the jury was unable to reach a verdict in relation to two other defendants named Ryan Reich and Stelios Contogoulas after nearly two weeks of deliberations. The SFO will now have to decide whether to seek a re-trial.
In January a UK jury acquitted six City brokers who were alleged to have helped manipulate the Libor, just months after the high profile conviction of former banker Tom Hayes. The men – former ICAP traders Colin Goodman, Daniel Wilkinson and Darrell Read, former RP Martin brokers James Gilmour and Terry Farr; and former Tullett Prebon broker Noel Cryan – were accused of conspiring with former UBS and Citigroup trader Hayes to rig a key lending rate used between banks for rewards such as takeaway curries and drinks. The trial constituted a major defeat to the SFO which this year requested an additional £21.1m to bankroll ongoing cases through to the end of the financial year.
On the convictions, Corker Binning partner David Corker said: ‘Questions do remain though about the way in which the Libor prosecutions were brought after loud political pressure. They were about conduct widely condoned or encouraged at the time in a broken, poorly regulated system and these defendants were foot soldiers for the most part in a global financial system beyond their full understanding.’
‘The convictions strike the harshest of warnings for those operating at relatively junior levels in financial markets and in other fields of commercial life where the way in which business is routinely done may sometimes, years later, be characterised as criminal by those with 20/20 hindsight and a massive banking crisis for which politicians wanted to find someone to blame.’
The watchdog’s future has been a topic of debate since Home Secretary Theresa May has emerged as the clear frontrunner in the race to succeed David Cameron as Conservative leader following the Brexit vote. May has previously voiced her preference to abolish the SFO and roll it into the National Crime Agency.