Libor Trials Continue: Is It Wrong To Be “Driven By Money”?

Five former Barclays bankers who were accused of conspiring to rig Libor interest rates were “driven by money”, and their offence, according to the London court where they were charged, “is no different from stealing.”

Jonathan Mathew, Stylianos Contogoulas, Jay Merchant, Alex Pabon and Ryan Reich all deny the charges of conspiracy to defraud with other Barclays employees between June 1, 2005 and August 31, 2007. The men are all accused of one count of conspiracy to defraud counterparties with whom they traded by dishonestly manipulating the London Interbank Offered Rate (Libor), the benchmark interbank lending rate.

Libor is calculated and published shortly before midday every day with billions of trades in the financial world conducted daily on the basis of it.

The court heard that three of the defendants who worked at the bank’s New York desk would message Libor submitters at Barclays in London when their desk was exposed or at risk of losing “huge amounts of money” by taking on too much risk or being unable to hedge risk.

They were said to have emailed the Barclays London-based Libor submitters, telling them which way they wanted the interest rates to go and hoping to produce a favourable Libor rate. The submitters would subsequently do their best to ensure these requests were carried out.

A series of emails between the traders and submitters detailing what was claimed as “clear evidence of dishonesty and manipulation” was heard in court.

The content of one email read: “our desk has a big position we’re very much in favour of a crazy high Libor setting.”

A further email read: “we need to fucking smash it. Have him set it low.”

Contogoulas also sent an email requesting a lowball Libor submission and even joked: “also please tell me what next week’s lottery numbers are.”

Contogoulas is reported to have remained part of the alleged conspiracy and continued to make requests of the Barclays submitters even after he left the bank to work at Merrill Lynch in 2006.

The jury was told that Barclays was one of 16 banks on a panel that set Libor each day, and that Matthew and his co-conspirator Peter Johnson were responsible for submitting the Barclays rate.

According to the court: “This is a case about employees of Barclays Bank rigging, for their own advantage, a global benchmark interest rate in order to make more profit on their trading.”

The trial is scheduled to last around 12 weeks.