UPDATE 2-U.S. wins first guilty plea from individual in Libor probe

Tue Jun 10, 2014 4:43pm EDT

(Adds details of allegations, comments, bylines)

By Jonathan Stempel and Aruna Viswanatha

NEW YORK/WASHINGTON, June 10 (Reuters) - A former Rabobank NV trader pleaded guilty on Tuesday for his role in manipulating Libor, becoming the first person to admit guilt in a worldwide probe into alleged manipulation of interest rate benchmarks.

Takayuki Yagami, a Japanese national who specialized in yen derivatives, pleaded guilty to one count of conspiring to commit wire fraud and bank fraud before U.S. District Judge Jed Rakoff in Manhattan, the U.S. Department of Justice said.

The government said Yagami admitted to conspiring with three other former Rabobank traders, who were criminally charged in January, to submit false, fraudulent Yen Libor submissions to benefit their own trading positions.

"This was the ultimate inside job," Leslie Caldwell, who heads the Justice Department's criminal division, said in a statement. "Traders illegally influenced the very interest rate on which their trades were based, using fraud to gain an unfair advantage."

Rabobank agreed last October to pay $1 billion to resolve U.S. and European probes into Libor manipulation. This included a $325 million criminal penalty for the Dutch bank and a deferred prosecution agreement with the Justice Department.

Libor underpins hundreds of trillions of dollars of transactions, and is used to set interest rates on credit cards, student loans and mortgages.

U.S. and European regulators have been probing whether banks attempted to manipulate the rate to benefit their own trading positions. Nine people, including Yagami, have been charged by the Justice Department.

"Manipulating Libor effectively rigs the global financial system, compromising the fairness of world markets," Attorney General Eric Holder said in a statement.

Yagami is not scheduled to be sentenced until June 2017, a delay that could allow time for cooperation with government probes. His lawyer, Matthew Levine, did not immediately respond to requests for comment.

The previously charged former Rabobank traders are Paul Robson, a senior trader in London; Paul Thompson, an Australian who ran a money market and derivative trading desk in Singapore; and Tetsuya Motomura, a senior trader and supervisor in Tokyo.

Michael McGovern, a lawyer for Robson; Marc Litt, a lawyer for Thompson; and Christopher Clark, a lawyer for Motomura, did not immediately respond to requests for comment.

'NO WORRIES MATE'

Prosecutors said the manipulation involving the Rabobank traders and others ran from roughly May 2006 to January 2011.

As an example, they cited Robson's alleged Sept. 21, 2007 submission of a one-month Yen Libor rate of 0.90 percent, up from 0.83 percent the prior day and above the 0.85 percent that he said "bookies" had predicted, after Yagami had told him he "would appreciate" a higher submission.

"No worries mate ... there's bigger crooks in the market than us guys!" Robson allegedly responded.

Rabobank was the fifth financial institution to settle with regulators worldwide over Libor manipulation. It joined Britain's Barclays Plc, ICAP Plc and Royal Bank of Scotland Group Plc, and Switzerland's UBS AG . (Reporting by Aruna Viswanatha in Washington, D.C.; and Joseph Ax, Nate Raymond and Jonathan Stempel in New York; Editing by Doina Chiacu and Tom Brown)