NEW YORK • Two former Rabobank traders from Britain are set to become the first defendants to face trial in the United States on charges stemming from a global investigation into whether various banks sought to manipulate the interest rate known as Libor.
Jury selection is scheduled for today in a Manhattan federal court in the case of Anthony Allen, 44, and Anthony Conti, 46, who are accused of helping manipulate interest rates to benefit the Dutch lender's trading positions.
The case is the first by the US Justice Department to go to trial over allegations that financial institutions manipulated Libor, or the London interbank offered rate, a short-term rate banks charge each other for loans.
The rate, which was overseen by the British Bankers'Association (BBA), is calculated based on submissions by a panel of banks. It underpins US$450 trillion (S$628 trillion) of financial products globally. The authorities have been probing whether banks fraudulently submitted artificial rate estimates to BBA to bolster profits on trading derivatives linked to Libor.
Those investigations have resulted in charges against 22 people in the US and Britain and around US$9 billion in regulatory settlements with financial institutions.
Those banks include Rabobank, which as part of a US$1 billion deal resolving US and European Libor-related probes agreed in 2013 to pay US$325 million as part of a deferred prosecution agreement.
Allen, Rabobank's former global head of liquidity and finance, and Conti, a senior trader, were indicted in the US in October 2014. Allen, who supervised Rabobank's Libor submission process, is accused of directing the bank's traders to advise those who made its Libor submissions about any financial interest they had in the rate.
Prosecutors contend that rate submitters, who included Allen, were told to make US dollar and yen Libor submissions that favoured the traders' positions. Prosecutors allege Conti frequently accommodated the traders' requests, in communications captured in e-mails and chat logs.
Allen and Conti, both British citizens, earlier this year pleaded not guilty. In August, a London trial involving yen Libor manipulation resulted in Tom Hayes, a former UBS and Citigroup trader, being sentenced to 14 years' jail. Another trial in London kicked off this week for six former brokers accused of rigging yen Libor rates. They have pleaded not guilty.