DOJ wants to exclude expert testimony proposed by ex-Deutsche Bank traders in LIBOR-rigging case

Maria Nikolova

The defendants’ proposed expert testimony as to the adequacy of the government’s discovery, establishment of the conspiracy, and benefit or harm to Deutsche Bank’s counterparties is incurably improper, the DOJ argues.

The United States Department of Justice (DOJ) and former Deutsche Bank traders accused of LIBOR manipulation have clashed over expert testimony. Less than a fortnight after Matthew Connolly and Gavin Campbell Black, former derivative product traders at Deutsche Bank, who stand accused of LIBOR rigging, enlisted the names of three experts supposed to help them in their defense, the Government has moved to exclude this expert testimony from the case.

On August 28, 2018 (Tuesday), the DOJ filed a Motion to exclude certain testimony with the New York Southern District Court. In brief, the Government opposes the defendants’ proposals.

According to the DOJ, the defendants’ proposed expert testimony as to the adequacy of the government’s discovery, establishment of the conspiracy, and benefit or harm to Deutsche Bank’s counterparties is incurably improper, and the Court should exclude it. In addition, given the deficiencies in Defendants’ disclosures, all three of their experts should be barred from testifying. At a minimum, the Court should require they provide the required “bases and reasons” for their opinions and thereafter allow the government an opportunity to challenge the testimony.

The first category of testimony that the Government challenges is testimony that is said to be “incurably improper”. Specifically, the former Deutsche Bank traders intend to introduce expert testimony that

  • the “Government failed to provide discovery,”
  • the “totality of the trading positions held by Deutsche Bank traders and/or counterparties . . . does not establish the alleged conspiracy,” and
  • Deutsche Bank’s counterparties may have benefitted or may not have been harmed by LIBOR manipulation.

According to the DOJ, such testimony would be irrelevant, mislead and confuse jurors as to the necessary elements of the charged offenses, and invade the respective roles of the jury and the Court. It should therefore be excluded.

In the second category is data-driven testimony that, while summarized in bullet-point lists, should be excluded because it is unaccompanied by adequate bases and reasons. According to the Government, the expert testimony proffered by the defendants would rely heavily on data analytics which, in spite of the government’s request, the defendants have refused to disclose or even to preview. Without knowing the bases and reasons for the opinions the defendants’ experts intend to offer, the Court will be unable to perform its gatekeeping role of determining the admissibility of expert testimony and the government will not be able to adequately prepare for cross-examination.

Despite the government’s requests, both defendants have refused to provide the missing bases and reasons—instead insisting they have no such obligation. But without any indication of the bases or reasons for Matthew A. Evans’ or Dr Jonathan Arnold’s opinions, the Court is set to be unable to assess “whether the reasoning or methodology underlying the testimony is scientifically valid” and “whether that reasoning or methodology properly can be applied to the facts at issue.”

Two areas of the defendants’ proposed expert testimony in particular demonstrate the need for further disclosures, the DOJ says. These are the opinions relating to the “economical reasonability” or “reasonable range” of LIBOR submissions, and testimony regarding Mr. Black’s position to benefit from the fraud. Both areas of testimony are potentially improper, as they carry a high risk of misleading and confusing the jury regarding the elements of the charged offenses.

The defendants intend for Dr. Arnold to testify that Deutsche Bank’s USD LIBOR submissions identified in the Superseding Indictment and in the government’s summary exhibits were “economically reasonable”, and for Mr. Evans to explain the submissions were “supported by factors that demonstrated the reasonability of each submission on each date”. Also, the defendants intend for Christopher Rooke to explain that a panel bank submitter like Deutsche Bank would have “had the discretion to submit LIBOR within a reasonable range”.

Allowing such testimony unfettered could easily mislead the jury regarding the law that applies to the charged offenses, by suggesting LIBOR submissions must have been “unreasonable” to sustain a conviction. That is not the law, the DOJ notes.

The case is captioned USA v. Connolly (1:16-cr-00370).

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