On July 7, the Southwark Crown Court in London sentenced four former Barclays traders to prison sentences, ranging from just under three years to six and a half years, for their involvement in a conspiracy to manipulate the London InterBank Offered Rate (“LIBOR”) between 2005 and 2007.  This trial was the third in Britain to focus on the global manipulation scandal.

The four traders, Peter Johnson, Jonathan Mathew, Jay Merchant, and Alex Pabon, and their colleagues, Stelios Contogoulas and Ryan Reich, were charged by the United Kingdom’s Serious Fraud Office (“SFO”) in 2014.  After an 11-week jury trial, the four traders were convicted of conspiring with each other and others to procure or make submissions of rates into the US Dollar LIBOR setting process.  The jury was unable to reach a verdict regarding Contogoulas and Reich, who will be retried in February 2017.

Former head of Barclays PLC dollar swaps desk in New York, Jay Merchant was portrayed as the ringleader of the conspiracy and received the longest sentence of six and a half years.  In Judge Anthony James Leonard QC’s Sentencing Remarks, he stated that Merchant “[bore] the greatest responsibility…It was under [his] leadership on the desk that the requests to the Libor submitters really took off.”  Even though Merchant received the longest sentence, the judge stated that he was “left in no doubt that [they] were all, for varying amounts of time, involved in a deliberate plan to manipulate the rates for [their] benefit and that of Barclays…”

Director of the SFO, David Green CB QC, commented that the “key issue in this case was dishonesty.”  He also explained how this trial illustrated the international effect of the LIBOR manipulation scandal: “The trial in this country of American nationals also demonstrates the extent to which the response to LIBOR manipulation has been international and the subject of extensive cooperation between US and UK authorities.”

While this verdict was a great victory for the SFO, it was by no means an end to their LIBOR investigation.  So far, a total of 19 individuals have been charged.  The SFO continues with its investigation, with six individuals awaiting trial on September 4, 2017, for the alleged manipulation of the Euro Interbank Offered Rate (“EURIBOR”).

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