Photographer: Matthew Lloyd/Bloomberg

business

Meet the Traders Caught up in Euribor Trial

Meet the Traders Caught up in Euribor Trial

Photographer: Matthew Lloyd/Bloomberg

One former Barclays Plc trader was convicted, one ex-Deutsche Bank AG executive pleaded guilty and another from that lender was acquitted of conspiring to rig Euribor, the interest rate benchmark behind trillions of dollars worth of securities. The jury couldn't reach a decision on three others.

Philippe Moryoussef was found guilty of manipulating Euribor, while Achim Kraemer was acquitted. The jury was unable to reach a verdict on Colin Bermingham, Sisse Bohart and Carlo Palombo. Deutsche Bank’s Christian Bittar pleaded guilty before the two-month trial started. Five other Deutsche Bank and Societe Generale SA traders were charged but were not extradited from Germany and France.

This is what you need to know about the defendants:

Christian Bittar | Deutsche Bank, London swaps desk

Age: 46
Verdict: Pleaded guilty

A decade ago, Bittar was one of Deutsche Bank’s stars, and got a bonus approaching 90 million pounds. He wasn’t in court -- having pleaded guilty barely a month before the trial, but that didn’t prevent him from starring there too.

His plea set the tone, and he was constantly mentioned as the person pulling the strings. One exchange read out in court cited him as telling hedge fund guru Alan Howard about an “agenda” to get Euribor down.

Bittar grew up in Senegal, went to a top French university and then started working for Societe Generale SA in Paris as a quantitative analyst. He was poached by Deutsche Bank, and was known as Mr. Basis Point, for his trades on tiny changes in short-term interest rates. Despite his massive paychecks, he lived in a relatively modest home, drove a regular car and didn’t indulge in extravagant clothing. 

He continuously leaned on his old friend, Philippe Moryoussef, his counterpart at Barclays, to get the bank’s Euribor submitters to adjust their entries.

Philippe Moryoussef  | Barclays, London swaps desk

Age: 50
Verdict: Guilty

Moryoussef fled to his native France rather than attend the trial, and didn’t have a lawyer in court. That made him a target for uncontested allegations from the prosecution, defense lawyers and defendants.

Moryoussef joined Barclays in 2005, and left in 2008 for a better-paid job. The prosecution said the conspiracy was run by him and Bittar, who counted on him to influence Barclays submitters. Moryoussef used tales of his enormous trades to plea for help but the positions he spoke of were largely Bittar’s.

In an early performance review, Moryoussef’s manager recognized his skills and ambition, but pushed him to be more aggressive. He once told Bittar that he hadn’t slept before a particularly large trade closed and flew off the handle when he thought another trader hadn’t carried out his wishes, later telling Bittar he “destroyed” her. Moryoussef was aware that what he was doing was wrong, the prosecution said, telling his co-conspirators not to discuss what they were doing and to delete messages.

“I believed at all times that Barclays submitters would act independently,” Moryoussef said in a prepared statement for the Serious Fraud Office. “I did on occasion ask for it to be high or low within a permitted range. I further believe that treasury took into account other information.”
 

Carlo Palombo | Barclays, London swaps desk

Age: 39
Verdict: None

Milan-born Palombo’s Barclays career started in 2002 with a rotation through various teams before he settled on the swaps desk.

In court, he cut an eccentric figure compared to the other defendants, proffering philosophical questions on income inequality. While he initially appeared to charm the jury with an off-beat sense of humor and twinkly smile, he struggled with a series of analogies that compared being a junior trader among other things “to the guy that serves you in McDonald’s.”

He repeatedly pointed to his lack of experience and that asking submitters for rates was a tiny part of his day. He skipped toilet breaks during some trading days to cover for his boss’s absence, and yet said his supervisor didn’t want him near the trading book.

When the prosecution suggested he wasn’t being paid 400,000 pounds per year for being a tea boy, Palombo responded: “As ridiculous as it sounds, a coffee boy at Barclays gets paid 400,000 pounds a year.”

He’s since left trading behind him and is studying for a doctorate in California having completed a Masters degree in psycho-social sciences in the U.K.
 

Colin Bermingham |  Barclays, London cash desk 

Age: 61
Verdict: None

Bermingham joined Barclays in 1974 after completing secondary school English, History and Art courses.

He started by keeping track of currency traders’ rough record by picking up tickets from 15-20 traders in a loud and boisterous climate he compared to a soccer stadium. If he didn’t do as he was told, one trader “said he was going to cut off parts of my body that were quite dear to me and have them for lunch,” Bermingham told the jury. At 21, he married his childhood sweetheart and moved to a countryside village.

By the late 1970s, Bermingham was on the the desk buying and selling money to meet the bank’s liquidity needs and became perhaps the most experienced person. He mentored another defendant, Sisse Bohart, and became a fatherly figure away from work, sometimes driving her to the airport when she returned to Denmark to see her ill step-father.

Bermingham said he didn’t recall any particular instances from more than a decade ago, but as a manager on the team making Euribor submissions, he would’ve only accommodated requests when they fit in with what the market dictated.

When asked by the prosecution why he didn’t make that clear to swaps traders, he said: “I think that’s something that’s just implicit. It was something that you didn’t have to say, because people understood there were choices.”

Sisse Bohart | Barclays, London cash desk

Age: 41
Verdict: None

Bohart’s mother and four siblings came from Denmark to watch her give evidence. She was an IT expert before being given a chance as a trader under Bermingham’s wing. Until she returned to Denmark in 2008, she was the main person at Barclays making Euribor submissions. She has a one-year-old son and works for an energy company in Denmark.

She said she sometimes struggled to adapt to English culture, especially because others had trouble with her direct Danish manner. As a trader, she preferred positions she could move in and out of quickly without much risk. A superior criticized her for that in an appraisal, saying: “at best she qualifies as a trading assistant. She seems to lack the drive and ambition that I see in other traders.”

Bohart appeared in more of the messages than anyone else, offering Palombo a rate submission “as high as you like” and saying “your wish is my command.”

“I think there are quite a few things here that look bad,” Bohart said. “Everything can look bad, but I think I had perfectly valid reasons for my decisions.”

Achim Kraemer | Deutsche Bank, Frankfurt trading pool manager

Age: 53
Verdict: Not Guilty

Kraemer was an altar boy from a picturesque village near Frankfurt where he still lives with his wife and three sons. His priest testified as a character witness for him. Without a college degree, Kraemer joined a bank as a teenage apprentice, breaking only to complete his mandatory military service.

He traded German government bonds for JPMorgan, before moving to Deutsche Bank in 1996. He never faced an internal investigation for any wrongdoing. Unlike the other defendants, the lender paid for Kraemer’s lawyers.

Kraemer’s role was to supervise long-term risk and he traded little himself. He denied knowing about any efforts to influence rates and, by the prosecution’s own admission, there weren’t many messages suggesting his involvement. But the prosecution argued that he oversaw a small team of traders who were a conduit between Bittar in London and the Euribor submitters sitting with him in Frankfurt. Kraemer didn’t need to message, the prosecution said, because he was there in person.

“I thought it was fine,” Kraemer testified about the occasional times he said he overheard others discussing requests for higher or lower submissions. “I thought there was a process with the submitter making the decision. I didn’t think much about it.”


Andreas Hauschild  | Deutsche Bank, Frankfurt swaps desk

Age: 53
Status: Charged in the U.K. but Germany rejected extradition request.

Hauschild was part of Deutsche Bank’s trading pool in Frankfurt, though, after 16 years, he left the lender to become Commerzbank AG’s global head of risk in 2006. According to Kraemer, Hauschild ran his own trading book even when he was a supervisors and would manage it while on vacation. At one point he complained to Kraemer that Euribor rates were costing him “a great deal of money.” The prosecution said Hauschild spoke about making money trades to skew Euribor through fake demands for cash.

While working as a banker, Hauschild earned several business degrees and is now studying for an executive MBA at the Frankfurt School of Finance.

Hauschild and his wife founded and partly funded a foundation for the preservation of a 16th century German prince’s estate in the town of Heidelberg. “In our own journey of life, it is important to give values back to our society,” Hauschild said on his LinkedIn page.

Hauschild declined to comment when contacted by Bloomberg News.
 

Kai-Uwe Kappauf | Deutsche Bank, Frankfurt swaps desk

Age: 42
Status: Charged in the U.K. but Germany rejected extradition request.

Kappauf started his career at Deutsche Bank as an apprentice in 1996. Kraemer supervised Kappauf and told the court that Kappauf was not very successful in early 2005. The prosecution said that he, Ardalan Gharagozlou and Joerg Vogt relayed Bittar’s Euribor requests to the submitters who were sitting in the next row in Frankfurt.

When Kappauf was fired in 2013 over communication linked to benchmark-rigging, he was a vice president. He made about 130,000 euros at the time and received a bonus of 180,000 euros in 2011, according to a labor court judgment he won against his dismissal. The bank appealed and the dispute was later settled.

While the terms of the settlement weren’t disclosed, Kappauf remained at Deutsche Bank.

Kappauf declined to comment when contacted by Bloomberg News.
 

Ardalan Gharagozlou | Deutsche Bank, Frankfurt swaps desk

Age: 46
Status: Charged in the U.K. but Germany refused extradition request.

Gharagozlou joined Deutsche Bank in 2000. When he was fired 13 years later over communication linked to benchmark-rigging, he was a vice president. He made about 265,000 euros at the time and received a bonus of 2.7 million euros in 2011, according to a labor court judgment in a case he won against his dismissal. The bank appealed and the dispute was later settled.

While the terms of the settlement weren’t disclosed, Gharagozlou left the bank.

Bloomberg News was unable to contact him for comment.
 

Joerg Vogt | Deutsche Bank, Frankfurt swaps desk

Age: 48
Status: Charged in the U.K. but Germany refused extradition request.

Vogt joined Deutsche Bank in 1991. During the period under investigation, Vogt was also in the Frankfurt trading pool. He once asked a colleague: “Have you seen the 3mth fixing today? That was an excellent concerted action Frankfurt-London.” But when Bittar asked him for a particularly high Euribor submission once, he responded that the request was “ridiculous.”

His last position at the bank was managing director. When he was fired in 2013 over communication linked to benchmark-rigging, Vogt made 265,000 euros and in 2011 had received a bonus of 780,000 euros, according to a labor court judgment he won against his dismissal. The bank appealed and the dispute was later settled.

The terms of the settlement weren’t disclosed, but Vogt left the bank.

Bloomberg News was unable to contact him for comment.
 

Stephane Esper | Societe Generale, Paris swaps trader

Age: 43 
Status: Charged in the U.K., but France refused extradition request.

Before he left Societe Generale in 2009, Esper worked in Paris as a trader of European interest-rate swaps. Prosecutors in the trial said Esper was part of the conspiracy to influence Euribor submitters to adjust their rate entries to benefit their trading positions, but he was only referred to occasionally.

The former swaps trader was spotted at a Paris employment tribunal hearing in January 2016. He was suing the bank to obtain documents, including transcripts of his Bloomberg chats with Moryoussef, to defend himself. While the employment tribunal rejected his bid, Esper submitted a fresh claim to obtain more than 8 million euros in damages and to cover the cost of his legal fees fighting the U.K. case.

During the 2016 Paris hearing, Esper’s employment lawyer claimed Moryoussef was responsible for her client’s training before he left for Barclays in 2008. If anything, Societe Generale is also to blame for failing to give Esper any specific training in relation to Euribor, she argued. Esper alleged that the bank’s hierarchy knew of his actions and even encouraged him to cooperate with other banks to gather market intelligence.