Ex-Deutsche Bank traders seek to provide further support for acquittal in LIBOR manipulation case

Maria Nikolova

Matthew Connolly and Gavin Campbell Black aim to overturn convictions that they participated in a scheme to manipulate LIBOR.

Several months after a jury convicted former Deutsche Bank traders Matthew Connolly and Gavin Campbell Black for their participation in a scheme to manipulate the London Interbank Offered Rate (LIBOR), the defendants have sought to support their claims for acquittal or a new trial.

In a raft of documents filed with the New York Southern District Court on Monday, March 25, 2019, Matthew Connolly and Gavin Campbell Black insist that the Court should enter judgment of acquittal or new trial in their case.

One of the main arguments advanced by both Mr Blackand Mr Connolly focuses on the Government’s interpretation of the British Bankers Association (BBA) rules. According to the defendants, these rules did not prohibit Panel Banks from considering their trading positions; nor was there any evidence that the BBA or anyone else in the industry who had read these rules interpreted them to prohibit this practice at the time of the events in question. To the contrary, the evidence demonstrated that market participants actually and reasonably believed that they were permitted to consider trading positions in selecting a rate from within a permitted range. 

Deutsche Bank’s LIBOR submissions were not false simply because they benefitted a position, Mr Connolly argues. Noticeably absent from the trial record, his Motion says, is any evidence concerning how the BBA expected Panel banks to formulate their LIBOR submissions and what the BBA would consider to be a “false” LIBOR submission. Nothing in the BBA LIBOR definition states that a Panel bank’s LIBOR submission must be the lowest rate at which it could borrow funds, nor did the government offer any evidence that the BBA expected that each Panel bank’s LIBOR submission be the lowest rate at which it could borrow.

Without offering any evidence regarding what the BBA permitted Panel banks to consider when formulating a LIBOR submission and without testimony from the BBA regarding its rules surrounding the LIBOR submission process, the government failed to prove that the LIBOR submissions at issue were false in any way, the defense argues.

Furthermore, the Government is said to have brought this prosecution without evidence that Mr. Black or Mr Connolly lied to anyone and without evidence that the BBA or a counterparty was deceived by any of his statements or harmed by any of their trades.

Hence, Messrs. Connolly and Black have to be acquitted or granted a new trial.

Let’s recall that the Department of Justice (DOJ) lashed back at the defendants’ arguments in February this year and explained that the jury had heard more than enough evidence to find all elements of the crimes alleged against Black and Connolly beyond a reasonable doubt. Thus, for instance, the co-conspirators’ testimony established that the defendants participated in the scheme, the DOJ says. Mr King (one of the co-conspirators), for example, described how he received requests from Gavin Black and Matthew Connolly to change Deutsche Bank’s LIBOR submissions to suit its trading positions.

Here are a couple of examples:

  • Bloomberg chat with Gurjit Dehl, in which Mr. Black asked “can we have a high 6mth libor today pls gezzer?”
  • Bloomberg chat with Mr. King, in which Mr. Black asked “COULD WE PLEASE HAVE A LOW 6MTH FIX TODAY OLD BEAN?”.

The case continues at the New York Southern District Court.

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