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Former Deutsche Bank traders indicted in U.S. in Libor probe

WASHINGTON/NEW YORK (Reuters) - Two former Deutsche Bank AG traders have been indicted for engaging in a scheme to manipulate Libor, the benchmark interest rate at the center of global investigations of various banks, the U.S. Justice Department said on Thursday.

Matthew Connolly, 51, of New Jersey, and Gavin Campbell Black, 46, of London, were charged in an indictment filed in federal court in Manhattan on one count of conspiracy to commit wire fraud and bank fraud and nine counts of wire fraud.

Connolly, formerly Deutsche Bank’s director of the pool trading desk in New York, was arrested on Thursday and later in the day released on a $500,000 bond after pleading not guilty at a hearing before U.S. District Judge Colleen McMahon.

Kenneth Breen, Connolly’s lawyer, said the allegations against his client “are untrue, and he looks forward to clearing his name in court.”

A lawyer for Black declined to comment.

The case follows the guilty plea in October of a former senior trader at Deutsche Bank, Michael Curtler of London. The bank agreed in April 2015 to pay $2.5 billion to resolve U.S. and U.K. probes.

The charges stem from allegations that Connolly and Black participated in a scheme to manipulate the U.S. dollar Libor, the London interbank offered rate, in a way that benefited themselves or Deutsche Bank.

Libor is based on what banks say they believe they would pay if they borrowed from other banks. The rate underpins trillions of dollars of financial products globally from mortgages to credit card loans.

U.S. and European authorities have been probing whether banks attempted to manipulate the rate to benefit their own trading positions.

Those investigations have resulted in billions of dollars in regulatory settlements with financial institutions, and charges by the U.S. Justice Department against 15 individuals.

According to Thursday’s indictment, from 2005 to about 2011, Connolly, Black, Curtler and at least seven other people conspired to submit false estimates for some Libor rates in order to manipulate the rate.

The indictment quotes messages between the traders in 2005 and later in which they discussed pushing the benchmark rate either up or down, depending on what they needed for their deals.

In one, Black messaged an unnamed person to ask, “Could we pls have a low 6mth fix today old bean?”

The case is U.S. v. Connolly et al, U.S. District Court, Southern District of New York, No. 16-cr-370. (Reporting by Diane Bartz; Editing by Cynthia Osterman and Tom Brown)

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