Photographer: Luke MacGregor/Bloomberg
markets

Ex-Barclays Trader Found Guilty of Euribor Rigging

Updated on
  • London jury fails to reach verdicts on three others in trial
  • Achim Kraemer found not guilty by jury in London fraud case

A London jury convicted former Barclays trader Philippe Moryoussef of conspiring to rig a key interest-rate benchmark and cleared Deutsche Bank AG executive Achim Kraemer, but couldn’t reach a verdict on three other traders.

Moryoussef, who fled to France to avoid the two-month trial, and a former Deutsche Bank trader, Christian Bittar, who pleaded guilty in March, will be sentenced next week. A decision on whether to retry the others -- ex-Barclays traders Colin Bermingham, Carlo Palombo and Sisse Bohart -- will also take place next week.

Prosecutors said that between 2005 and 2009, Bittar and Moryoussef were the ring leaders in the effort to rig Euribor, a benchmark which influences the price of thousands of securities. While the Serious Fraud Office won convictions of the pair -- the case’s primary targets -- the outcome raises questions about the prosecutors’ approach to the seven-year probe since none of the defendants who actually appeared at the London trial were convicted.

Bittar and Moryoussef “damaged trust in an important system which sets the rates for $180 trillion worth of financial products," SFO Director Mark Thompson said. "They were senior figures who abused their positions for personal gain and to advantage the banks they worked for."

On Thursday, the jury foreman told Judge Michael Gledhill that the 12-person panel was unlikely to reach the 10-vote majority needed for a verdicts on the remaining three defendants after eight days of deliberations, and the judge dismissed the jurors.

“You have been very attentive,” Gledhill said. “You go from this court with my great thanks.”

Profiles of the personalities in the case

Kraemer, who still works at Deutsche Bank after 22 years, said he was looking forward to re-building his career.

“I have always maintained my innocence of the charge,” said Kraemer, who is now a liquidity manager. “I’m very grateful to the jury for the dedication and effort that they have put into dealing with my trial. The last two years has been a difficult time for me.”

Even before the trial started, the SFO had some setbacks. Courts in Germany and France blocked the extradition of four former Deutsche Bank employees and one former Societe Generale SA trader. Days before the hearings were to begin in London’s Southwark Crown Court, Moryoussef went to France, with his lawyer saying he was unlikely to get a fair trial and he refused to come.

Big Fines

The trial came after financial institutions including Deutsche Bank and Barclays paid more than $9 billion in fines. Not including the six Euribor cases, 5 of a total of 13 individuals charged with rate-rigging offenses were convicted.

Over the two months, the four defendants who appeared vigorously denied their involvement in any conspiracy to rig Euribor, a rate which is put together through submissions from as many as 48 banks.

Prosecutors alleged that derivatives traders like Bittar, Moryoussef and Palombo earned millions making massive trades depending on Euribor and leaned on submitters like Bermingham and Bohart, who made the banks’ entries. Kraemer, they said, was part of a group of traders relaying messages between Deutsche Bank’s London and Frankfurt offices.

The prosecution relied heavily on emails, chat-room messages and phone calls
showing the swaps traders asking their counterparts for higher or lower submissions, depending on the day, and then deleting some of the evidence. The defendants argued they were entitled to make or listen to such requests, as long as the values they entered were within a range that chimed with the current market conditions.

The former traders had all learned their craft at their bank. They said they were merely taking part in accepted practices at the lenders and did so with a clear conscience.

(Adds SFO comment in fourth paragraph.)