Benchmark Fixing: Former Deutsche Bank & Barclays Traders Plead Not Guilty to Euribor Rigging and Royal Bank of Scotland Will Pay $85M Penalty to Settle US ISDAFIX Manipulation Allegations

In London, six traders have pleaded not guilty to charges accusing them of trying to rig Euribor, which is the Brussels-based equivalent of the London Interbank Offered Rate (Libor). Euribor is key in establishing the rates on financial contracts, loans, and other financial products around the world.

The defendants include former Deutsche Bank (DB) trader Christian Bittar, current Deutsche trader Achim Kraemer, and former Barclays (BARC) traders Philippe Moryoussef, Colin Bermingham, Carlo Palombo, and Sisse Bohart. They are charged with one count of conspiracy to defraud through the making or obtaining of false or misleading Euribor rates in order allegedly enhance trading profits.

The criminal charges are related to a probe by the Serious Fraud Office. Five other traders from Deutsche Bank and Societe Generale were previously charged.

To date, authorities have charged more than two dozen people and fined 11 financial institutions about $9B over Libor and Euribor rigging allegations. In January, Tom Hayes, the ex-Citigroup (C) and UBS (UBS) trader who was the first person sent to jail for Libor rigging, appealed his conviction. He contends that due to the fact that he has Asperger syndrome, he did not get a fair trial.

An expert who spoke on Hayes’ behalf claims that the former trader would not have been able to “see” that his behavior was dishonest because of his disorder, which places him on the Autism spectrum. Former colleagues had dubbed him “Rain Man.” However, Hayes was only diagnosed with Aspergers in 2015. The Court of Appeal has reduced Hayes’ 14-year prison term to an 11-year sentence.

CFTC Orders RBS to Pay $85M
In other Benchmark rigging news, the US Commodity Futures Trading Commission ordered The Royal Bank of Scotland (RBS) to pay an $85M penalty to settle allegations that it attempted to rig the USD ISDAFIX benchmark. According to the regulator, from 1/2007 through 5/2012, multiple RBS traders tried to manipulate the USD ISDAFIX to benefit certain derivatives positions it held that were valued or priced off of the benchmark. The USD ISAFIX is the global benchmark used for interest rate products.

The CFTC order found that through its traders, RBS made transactions in certain interest rate products at the crucial 11am fixing time with the intention of impacting reference rates and spreads that a top interest rates swap broker sent to submitting banks. As a result, this impacted the USD ISDAFIX that was published.

Emails and audio recordings capture RBS traders talking about their plans to move USD ISDAFIX so that their positions would benefit. The CFTC contends that RBS traders knew that this type of manipulative trading could negatively affect counterparties.

RBS is not the only bank accused of trying to rig USD ISDAFIX. Last year, Goldman Sachs (GS) paid a $120M penalty and Citibank (C) paid $250M to settle CFTC charges. In 2015, Barclays paid a $120M penalty.

Our securities fraud law firm works with investors seeking to recoup losses sustained from investment fraud or other wrongful acts. We have helped thousands to recoup their investments. Contact The SSEK Partners Group today.

Ex-Barclays, Deutsche Bank Euribor Traders Plead Not Guilty, Bloomberg, February 7, 2017

The CFTC Order in the Royal Bank of Scotland Case (PDF)

Six traders plead not guilty in UK in first Euribor rigging case, Reuters, February 7, 2017

CFTC’s Examples of Royal Bank of Scotland’s Misconduct (PDF)