Libor convictions boost the SFO

Three former Barclays traders have been convicted of Libor fraud—results that will “buoy up” the Serious Fraud Office (SFO) even though questions remain, a senior business fraud solicitor has said.

A jury at Southwark Crown Court found Jonathan Mathew, Jay Merchant and Alex Pabon guilty of conspiracy to defraud in connection with an SFO investigation into the manipulation of US Dollar Libor (the London Interbank Offered Rate) between June 2005 and September 2007. The verdict followed an 11-week trial. Two co-defendants were cleared.

Another man, Peter Johnson, pleaded guilty in October 2014, and in August 2015, former UBS and Citigroup trader Tom Hayes was found guilty of manipulating Libor. That makes five convictions out of 19 individuals charged following the SFO investigation. A further six individuals await trial for the alleged manipulation of EURIBOR on 4 September 2017.

David Corker, partner at Corker Binning, said: “These results will buoy up the SFO but they were desperately needed to save its reputation after the not guilty verdicts in the second Libor trial. Questions do remain though about the way in which the Libor prosecutions were brought after loud political pressure.

“They were about conduct widely condoned or encouraged at the time in a broken, poorly regulated system and these defendants were foot soldiers for the most part in a global financial system beyond their full understanding. The convictions strike the harshest of warnings for those operating at relatively junior levels in financial markets and in other fields of commercial life where the way in which business is routinely done may sometimes, years later, be characterised as criminal by those with 20/20 hindsight and a massive banking crisis for which politicians wanted to find someone to blame.”

Ruth Harris, criminal defence partner at Hodge Jones & Allen, said the convictions “will no doubt be seen as a great success for David Green, director of the SFO, who accepted that his organisation will largely be judged on this investigation. “It will be interesting to see how the SFO proceeds from here, and whether it will continue to expand its investigation or will be satisfied with the convictions as reflecting the state of criminality in this area.”