Newspaper article International New York Times

U.S. Charges 2 More in Rigging of Interest Rate

Newspaper article International New York Times

U.S. Charges 2 More in Rigging of Interest Rate

Article excerpt

The former traders are the latest Wall Street workers to be ensnared in the government's crackdown on manipulation of Libor, a benchmark interest rate.

The Justice Department has announced criminal charges against two former Deutsche Bank traders accused of manipulating interest rates, the latest Wall Street employees to be ensnared in the United States government's wide-ranging crackdown.

The former traders, Matthew Connolly and Gavin Campbell Black, were indicted on charges that they manipulated the London interbank offered rate, or Libor, a benchmark interest rate that underpins trillions of dollars in mortgages, student loans and other debt.

Mr. Connolly, who was taken into custody on Thursday, is the first American citizen to be charged in the Libor case.

Before leaving Deutsche Bank -- Germany's largest financial institution -- both defendants were senior traders there. Mr. Connolly was the director of a trading desk in New York that worked with financial products based on Libor, while Mr. Black was a director on a Deutsche Bank trading desk in London.

The case against the former traders, coming more than a year after Deutsche Bank resolved its role in the scheme, represents an escalation of the Justice Department's long-running investigation into Libor manipulation. The investigation has already led to criminal cases against six banks, including Barclays and UBS.

When Deutsche Bank settled the charges against it last year, it agreed to pay $2.5 billion in regulatory and criminal penalties, a record for the Libor cases. Deutsche Bank also agreed to accept a criminal guilty plea for the British subsidiary at the center of the case.

The Libor case announced on Thursday is unusual in that it also includes charges against individual bank employees. In the wake of the financial crisis, banks paid billions of dollars in fines, but none of their top executives went to prison, stoking criticism of the Justice Department's approach to Wall Street wrongdoing.

In contrast, the Justice Department charged 13 individuals linked to Libor manipulation. Three pleaded guilty, two were convicted at trial, and the remaining cases are continuing. …

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