Libor/forex: throwing own employees under the bus

11 November, 2019

Matthew Connolly, who once led Deutsche Bank’s pool trading desk in New York, was sentenced by U.S. District Judge Colleen McMahon in Manhattan to six months’ home confinement, while Gavin Campbell Black, who worked on the bank’s London desk, was sentenced to nine months’ home confinement, which he will be allowed to serve in England. McMahon also ordered Connolly to pay a $100,000 fine, and Black to pay a $300,000 fine. The sentence is a setback for U.S. prosecutors in one of the few criminal cases to emerge from a sweeping probe of Libor rigging. The prosecutors had asked the judge to order “substantial” prison time for both men, saying federal guidelines called for close to 10 years, along with a $3 million fine for Connolly and a $2 million fine for Black.
McMahon, however, said the prosecutors were trying to hold Connolly and Black responsible for behavior throughout the financial industry.
Out of 27 traders prosecuted for allegedly manipulating benchmark interest or foreign exchange rates, nine have successfully challenged charges. Eight pleaded guilty.
“You didn’t think you were cheating any customers?” an attorney for one of the traders asked Mr. Gardiner. “I didn’t think I was cheating anyone,” he responded.
After four hours of deliberation, the jury acquitted all three traders.
The case marked the failure of a multiyear effort to crack down on alleged wrongdoing by individuals in finance. The Obama Justice Department announced several policy changes to encourage more charges against individuals, including instructing prosecutors to focus on individuals from the start of any white-collar investigation.
In a September 2015 memo outlining the new approach, Ms. Yates told prosecutors that companies needed to provide the Justice Department with “all relevant facts” about their employees involved in misconduct to get credit for cooperating.
The Trump administration has pursued the same policy, describing companies as their partners in fighting corporate wrongdoing. Critics say the policy effectively turns banks into an arm of the prosecution and incentivizes them to seek leniency by throwing their own employees under the bus.
https://www.wsj.com/articles/prosecuting-bankers-proves-exercise-in-frustration-11551614418

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