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Trial for Five Former Barclays Bankers on Libor Rigging Case to Start Monday

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(Credit: John Lawson/Getty Images ) Barclays Bank, London, EnglandCompany Signs
April 5
8:15 AM 2016

United Kingdom's Serious Fraud Office will start the third trial on Libor rigging case this Monday. Five former Barclays' bankers will stand trial after investigation setback.

London Interbank Offered Rate (Libor) is the estimated average of interest rates by leading UK's bank in London. Based on its offered rate, the bank will charge the borrower from other banks. The rates are calculated for five currencies and published every business day by Thomson Reuters.

In the financial market, an estimated $500 trillion of derivates and financial products around the world are connected to Libor. As many financial institutions use Libor to fix borrowing fost on derivatives, mortgage and loans. However, contributing banks were reported to often manipulate the rate, as an attempt to take profit from positions based on fixings.

In order to regulate the Libor activity, UK Financial Conduct Authority was appointed to oversee Libor. The UK government also issued the Financial Services Act 2012, which regulated all false or misleading statement related to Libor benchmark setting is a criminal offence.

Since then, UK government through Serious Fraud Office (SFO) have set trial on many individuals for financial misconduct related to Libor. Until recently SFO have charged 13 people with Libor rigging-reated offences.

However, from those number, only one was found guilty, a former UBS and Citigroup trader, Tom Hayes. The Telegraph reported that Tom Hayes was sentenced to 11 years in prison.

Meanwhile, other brokers from RP Martin, Tullett Prebon and ICAP were found not guilty of rigging the yen Libor benchmark.They are Darrell Read, Colin Goodman, Danny Wilkinson, Noel Cryan, James Gilmour and Terry Farr.

Following successful trial of Tom Hayes, SFO faced setbacks in last January. The trial of brokers who were charged to rig dollar Libor must be dropped due to the lack of evidence. Furthermore, two businessmen, James Sutherland and Jack Flader, who were accused for a boiler room scam was also proven not guilty.

SFO will begin the third trial of five former Barclays bankers on Monday, and Bloomberg reported that all of them pleaded not guilty ahead of trial. The traders, Jonathan Mathew, Stylianos Contogoulas, Ryan Reich, Alex Pabon and Jay Merchant denied the charges on Monday morning. They face charges to conspire in manipulating US dollar Libor between June 2005 and September 2007.

"Given these recent and very public failures, the SFO will have to restore some credibility on its decision to prosecute cases such as the upcoming third Libor trial," Bambos Tsiattalou, founder and partner at Stokoe Partnership Solicitors told City AM.

After a series of setback UK's Serious Fraud Office will continue chasing perpetrator on Libor rigging. The trial will be held in Southwark Crown Court, London for five former Barclays' traders.

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