Ex-Deutsche Bank traders convicted of LIBOR rigging secure NYCDL support

Shortly after Matthew Connolly and Gavin Campbell Black filed their briefs with the Second Circuit Court of Appeals, asking for overturning of their conviction of LIBOR rigging, the former Deutsche Bank traders have secured backing from the New York Council of Defense Lawyers (NYCDL).

Earlier this week, NYCDL filed the so-called “amicus brief” (a letter by a friend to the Court). The document is in support of Gavin Campbell Black and Matthew Connolly, urging reversal of their convictions.

NYCDL explains that it has a particular interest in this case because it directly implicates NYCDL’s core concerns with combatting the unwarranted extension of criminal statutes and promoting clear standards for the imposition of criminal liability.

NYCDL argues that the alleged fraudulent representations in this case are estimates of the interest rates at which the defendants’ former employer, Deutsche Bank AG, could borrow funds in the interbank market. According to NYCDL, these estimates were a matter of opinion, the rates submitted were all reasonable estimates of Deutsche Bank’s anticipated borrowing costs; and the defendants never caused or intended to cause Deutsche Bank to submit a rate that was false.

The Council criticizes the Government’s theory of prosecution, which is that the defendants committed fraud by causing Deutsche Bank to submit estimates that were modified to take account of the bank’s trading positions. The District Court endorsed this theory.

This is not, and has never been, the law, according to NYCDL. Fundamental to a charge of criminal fraud is the defendant’s making of a false statement while knowing or believing it was false. Where the statement is one of opinion, this means that the Government must establish that the defendant knew the opinion was false or, at the very least, lacked a reasonable basis, NYCDL says.

In this case, the Council argues, the Government did not even attempt to prove that Deutsche Bank’s LIBOR estimates were false or unreasonable or that the defendants believed them to be so. It therefore follows that the Government failed to prove that the defendants participated in a scheme to issue fraudulent LIBOR estimates.

Furthermore, according to NYCDL, the Government asserts a novel theory of wire fraud which would upend the law of liability for opinions and has potentially far-reaching implications, such as exposing business executives and employees to prosecution and imprisonment for issuing opinions and making estimates that are reasonable, accurate and honestly believed, simply because the opinion or estimate was influenced by their employer’s financial interest.

In October 2018, a jury convicted Connolly and Black for their participation in a scheme to manipulate the London Interbank Offered Rate (LIBOR).

The decision, made by a jury at the New York Southern District Court, followed a month long jury trial. The jury convicted former Deutsche Bank supervisor Matthew Connolly, 53, of Basking Ridge, New Jersey, of one count of conspiracy and two counts of wire fraud and former derivatives trader Gavin Campbell Black, 48, of London, of one count of conspiracy and one count of wire fraud.

Connolly was Deutsche Bank’s director of the Pool Trading Desk in New York, where he supervised traders who traded USD LIBOR-based derivative products. Black was a director on Deutsche Bank’s Money Market and Derivatives Desk in London, who also traded USD LIBOR-based derivative products.