* Hearing set in London court for May 27
* Ryan Reich, Jay Merchant's lawyers say clients refute
* Sixteen charged so far in global Libor investigation
(Repeats with additional reporting credit. No changes to text.)
By Kirstin Ridley
LONDON, April 28 Britain on Monday filed its
first criminal charges against U.S.-based Libor traders, as the
UK arm of a complex global investigation into alleged benchmark
interest-rate rigging stretches across the Atlantic.
The Serious Fraud Office (SFO) charged three former traders
at British bank Barclays - director of dollar
fixed-income swaps Jay Merchant and dollar interest rate
derivative traders Alex Pabon and Ryan Reich - with conspiracy
to defraud in connection with its Libor inquiry.
A provisional hearing has been scheduled for the three men,
who the SFO confirmed were currently in the United States, at
Westminster Magistrates Court in London on May 27.
Lawyers for Reich and Merchant, Ben Rose of Hickman and Rose
and Brian Spiro of BCL Burton Copeland, respectively, said their
clients refuted any allegations of wrongdoing.
"He (Reich) is not guilty of this offence and will
vigorously contest these allegations at his forthcoming trial,"
Reich's lawyer said in an emailed statement.
Merchant's lawyer said: "Should this matter proceed, he (Jay
Merchant) has no doubt that he will be fully vindicated and it
will be shown that he acted at all times in a right and proper
Pabon's London lawyer was not immediately available for
The charges could prompt the first extradition to Britain
from the U.S. in the lengthy investigation into the alleged
rigging of Libor (London interbank offered rate), a central cog
in the global financial system.
The SFO, which has now charged 12 in connection with its
criminal Libor investigation, declined to comment on any
extradition request or give further details about the charges.
The investigation into benchmark interest rates has been
overshadowed by a parallel inquiry into allegations of
foreign-exchange market rigging, which on March 5 reached into
the heart of London's financial establishment when the Bank of
England suspended a staff member.
However, the inquiry into alleged fixing of Libor and
related Euribor rates, against which around $450 trillion of
financial contracts from derivatives to consumer loans are
priced, has so far seen U.S. and European authorities fine 10
banks and brokerages $6 billion and charge 16 men.
The SFO in February charged three former London-based
Barclays Libor submitters - Peter Johnson, Jonathan Mathew and
Stylianos Contogoulas - over a two-year scheme to rig rates and
in March charged three former ICAP brokers with
fraud-related Libor offences.
Barclays was the first bank to settle U.S. and UK regulatory
allegations of rate manipulation, paying around $450 million in
fines in 2012. But even regulators admitted privately they were
taken aback by an ensuing public and political backlash, which
forced out four top Barclays directors, sparked a fraud squad
probe and several parliamentary reviews.
In their case to date against former London-based Barclays
traders already charged, SFO lawyers have said they have sifted
through "vast amounts" of documents, adding that much of the
evidence against Johnson, Mathew and Contogoulas was in email
The three men, who are next expected to appear in court
towards the end of July, are the first to face charges for the
alleged manipulation of the U.S. dollar-denominated Libor rate.
Ten other men face U.S. and UK criminal charges for manipulating
The SFO has already charged three other men as part of its
Libor investigation, including Tom Hayes, a former yen
derivatives trader at UBS and Citigroup, who
pleaded not guilty in December.
Hayes is due to stand trial in January 2015 on eight charges
of conspiring with staff from at least 10 major banks and
brokerages to manipulate yen Libor rates between 2006 and 2010.
Terry Farr and James Gilmour, two brokers from RP Martin,
have been charged and pleaded not guilty to similar
fraud-related offences. Their trial has been scheduled for
September 2015, in part to allow the SFO time to bring charges
against further alleged co-conspirators.
(Additional reporting by Esha Vaish and Karen Rebelo in
Bangalore; Editing by Erica Billingham)