Three ex-Barclays traders found guilty of fraud in Libor trial

Jay Merchant, Jonathan Mathew and Alex Pabon were all accused of attempting to manipulate interest rate benchmark Libor between June 2005 and September 2007, and were found guilty by the jury, reports The Telegraph.

They will join Peter Johnson, another former Barclays trader who previously pleaded guilty, in court on Wednesday for sentencing.

The jury failed to reach a verdict on two other defendants, Stylianos Contogoulas and Ryan Reich.

It is now down to prosecutors at the Serious Fraud Office to decide whether or not the case should return for a re-trial or if the charges should be dropped.

Prosecutors successfully argued that the guilty traders, 45-year old Mr Merchant and 37-year old Mr Pabon, would dishonestly ask Libor submitters Mr Johnson and his underling Mr Mathew, aged 35, to falsely submit Libor rates that flattered their trading positions.

This represented a financial cost to the bank’s counterparties – typically other banks or major companies on the other side of trades – who thought they were taking part in transactions based on an honest Libor benchmark.

Trillions of pounds of loans, derivatives and other transactions are also based on the index, which measures how much interest banks charge each other to borrow money.

The defendants had argued that they should not be found guilty because they did not know they were behaving dishonestly and so did not meet the legal definition of fraud.

Mr Mathew argued that he was very junior and untrained, and simply stepped into his boss’ shoes when 61-year-old Mr Johnson was on holiday.

Mr Pabon and Mr Merchant said they believed it was part of their job and were never told otherwise by the bank’s compliance department, despite making no effort to disguise their actions.

But the jury found the three guilty.

“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,” said David Green, head of the SFO.

“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.”

Barclays itself paid £290m in fines over the Libor manipulation scandal almost exactly four years ago.

The only previous Libor-related conviction was that of Tom Hayes, an ex-UBS and Citi trader who was jailed for 14 years last year, a sentence that was cut to 11 years on appeal.

Mr Hayes continues to protest his innocence and is attempting to raise funds to take his case to the Criminal Cases Review Commission.

By contrast six brokers accused of working with Mr Hayes were acquitted in January 2016.