LONDON – Two former junior Barclays traders have been unanimously acquitted by a London jury of conspiring to rig Libor benchmark interest rates in a blow to the UK Serious Fraud Office (SFO).
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Ryan Reich, a 35-year-old American, and Greek national Stylianos Contogoulas, 45, walked free after their second trial on a single charge of conspiracy to defraud. The first jury to examine their case could not reach a verdict last year, although four Barclays co-defendants were jailed.
The verdicts in London's fourth Libor trial bring to eight the number of defendants cleared in a five-year criminal inquiry into whether bankers were dishonest when they manipulated benchmark rates up to 12 years ago. Five have been convicted.
The jury found Reich not guilty within hours of being sent to consider its verdict on Wednesday after a six-week trial. Reporting restrictions were imposed until Contogoulas was acquitted on Thursday.
Reich, who came to Southwark Crown Court to support Contogoulas, said he was saddened it had taken eight years to prove that, as a 24-year-old trader, he had done his job honestly, appropriately and according to the rules at the time.
"I cannot help but note that this trial was the first time that any jury has actually been asked to consider whether as a matter of fact any trader deliberately broke the rules or caused false Libor (rates) to be submitted," he said in a nod to the judge's directions to the jury.
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Standing on Southwark Crown Court's steps, Contogoulas said simply: "I just want to go home to my wife and kids."
Jurors stepped up to shake his hand. "If you see Reich, wish him well," said one.
SFO prosecutor Emma Deacon declined to comment. The SFO noted the acquittals in a brief statement.
CHEQUERED HIT RATE
Barclays was the first of 11 banks and brokerages to pay hefty fines for Libor-related misconduct in 2012, sparking a political backlash that forced out senior executives including former CEO Bob Diamond, prompted the SFO investigation and brought in new laws to criminalize rate rigging.
Some lawyers say the unpredictable nature of criminal prosecutions and the English jury trial system means the SFO, which has been dogged by speculation that Prime Minister Theresa May might merge it into a national crime-fighting body, should not be judged by its latest loss or win.
The agency has been praised by some lawmakers for clinching a handful of corporate plea deals that include a 671 million pound ($840 million) deferred prosecution agreement with Rolls-Royce over widespread bribery in January.
But Jonathan Pickworth, a lawyer at White & Case which was not involved in the case, said the speedy acquittal "tells us all we need to know about what the jury thought of the prosecution case".
The SFO had alleged Reich and Contogoulas plotted with other Barclays staff between June 2005 and September 2007 to skew Libor (London interbank offered rate), a benchmark for rates on around $450 trillion of financial contracts and loans worldwide.
The jury was presented with computer messages that Reich and Contogoulas sent to the bank's Libor submitters, responsible for sending the bank's daily cost of borrowing estimates to the banking industry association that administered Libor at the time, requesting preferential rates.
But the men denied dishonesty, arguing that their bosses had condoned such requests, that they had communicated openly and that banks had commonly submitted rates with a commercial bias - a practice tolerated by senior industry figures at the time.
Reich told the court that it was only at his trial, some 10 years after the events, that he was told Libor submitters were not allowed to take financial interests into consideration.
During the trial the SFO's only banking industry expert admitted he had broken court rules by sending texts and emails to contacts, while giving evidence in court, to check he was answering basic questions correctly.
Prosecution witness John Ewan, the former Libor manager of the British Bankers' Association that oversaw Libor, also conceded that a bank did not break Libor rules at the time if it submitted any rate within a permissible market range.
Matthew Frankland, a lawyer at Byrne and Partners who acted for one of the former Barclays bankers convicted last year, said he was "actively considering" whether new disclosures in the retrial might prompt a fresh appeal.
The verdicts mark an end to the SFO's current Libor trials. But it has also charged five men and one woman with conspiracy to defraud in connection with an investigation into the setting of Euribor, a Brussels-based euro benchmark. The six, who deny wrongdoing, are due to stand trial in September.
(Editing by Rachel Armstrong and Greg Mahlich)