LONDON May 27 Three former Barclays
traders appeared in a London court on Tuesday as Britain
formally began its first criminal proceedings against U.S.-based
Libor traders, part of a global investigation into alleged
rigging of benchmark interest rates.
The Serious Fraud Office (SFO) alleges that Jay Merchant,
43, a director of dollar fixed-income swaps, and interest rate
derivative traders Alex Pabon and Ryan Reich, aged 35 and 32
respectively, conspired together and with others to defraud
Barclays and its entities between 2005 and 2007.
The men, who spoke only to confirm their names and dates of
birth, were ordered to appear before a higher Crown Court on
Lawyers for Reich and Merchant have said their clients deny
any allegations of wrongdoing. Pabon's lawyer declined comment.
British and U.S. prosecutors have charged 16 individuals to
date in connection with the investigation into alleged rigging
of benchmarks such as Libor (or London interbank offered rate),
against which around $450 trillion of financial contracts from
derivatives to credit card loans are priced worldwide.
U.S. and European regulators have meanwhile fined 10 banks
and brokerages - including JPMorgan, UBS,
Deutsche Bank, Royal Bank of Scotland and
ICAP - more than $6 billion over their alleged role in a
scandal that has undermined faith in the financial industry.
NO EXTRADITION NEEDED
Merchant, Pabon and Reich voluntarily attended London's
Westminster Magistrates' Court without the need for the SFO to
start extradition proceedings and have been allowed to remain
resident in the United States under their bail conditions.
But they each have to pay a 50,000 pound ($84,200) security
to the court, which they will forfeit if they fail to appear for
hearings. The next hearing has been scheduled at London's
Southwark Crown Court.
The SFO has charged six former Barclays staff to date over
the alleged scam, after in February charging three former
London-based Barclays Libor submitters - Peter Johnson, Jonathan
Mathew and Stylianos Contogoulas.
The investigation into benchmark interest rates has lately
been partly overshadowed by a parallel global inquiry into
allegations of foreign-exchange market rigging, which has led to
around 35 people globally being suspended, placed on leave or
However, the inquiry into alleged fixing of Libor and
related Euribor rates has been gathering steam. British and U.S.
watchdogs fined brokerage RP Martin $2.3 million two weeks ago
to settle claims its staff helped manipulate Libor, and in March
the SFO charged three former ICAP brokers.
Barclays was the first bank to settle U.S. and UK regulatory
allegations of rate manipulation, paying around $450 million in
fines in 2012. Regulators admitted privately they were taken
aback by an ensuing public and political backlash, which forced
out four top Barclays directors including Chief Executive Bob
Diamond, sparked a fraud squad probe and several parliamentary
The British bank was last week fined another 26 million
pounds for failing to prevent a trader from allegedly
manipulating gold prices.
($1 = 0.5936 British Pounds)
(Editing by David Holmes)