NEW YORK (Reuters) - Lawyers for two former Rabobank [RABO.UL] traders urged jurors on Tuesday to reject U.S. charges that they schemed to manipulate Libor interest rates, arguing the prosecution’s case relied on out-of-context emails, instant messages and data.
The arguments came during the trial in federal court in Manhattan of Anthony Allen, 44, and Anthony Conti, 46, who are accused of helping manipulate benchmark interest rates to benefit the Dutch lender in trading derivatives linked to Libor.
Libor, short for London interbank offered rate, is a short-term rate banks charge each other for loans and underpins hundreds of trillions of dollars in financial products globally. It is calculated daily based on submissions by a panel of banks.
The case is the first by the Justice Department to go to trial following global investigations into whether various banks submitted artificial rate estimates to bolster profits on trading derivatives tied to Libor.
Brian Young, a lawyer for the U.S. Justice Department, told jurors the two British citizens were “active and enthusiastic participants” in a conspiracy at Rabobank to rig Libor rates, and in participating “left a paper trail a mile long.”
“These defendants were not entitled to use Libor rates to line their own pockets and Rabobank‘s,” he said.
But Michael Schachter, Allen’s lawyer, argued the prosecution case against his client boiled down to just 12 emails and instant messages over four years in which traders told Allen their preferences about how to set Libor.
Rather than asking why traders were making requests, “the better question is why they didn’t ask more,” he said.
The evidence showed Allen, Rabobank’s former global head of liquidity and finance, considered their requests “irrelevant” and that traders knew that he ignored them, he said.
“The more you dig in, the more the prosecution’s case falls apart,” Schachter said.
Aaron Williamson, Conti’s lawyer, acknowledged his client did factor in traders’ positions in his role setting the U.S. dollar Libor rate.
But Williamson argued Conti, a senior trader, believed he was allowed to do so and “only took traders positions into account when they were consistent with his own honest estimate” of what the rate should be, which Libor data demonstrated.
Investigations into rate rigging resulted in charges against 22 people in the United States and United Kingdom and $9 billion (£5.84 billion) in regulatory settlements with financial institutions, including Rabobank, which agreed to $1 billion in settlements in 2013.
The case is U.S. v. Allen, U.S. District Court, Southern District of New York, No. 14-cr-00272.
Reporting by Nate Raymond in New York; Editing by Alden Bentley