NY Court adjourns trial of ex-Deutsche Bank traders until September

Maria Nikolova

The Court has found that Matthew Connolly and Gavin Campbell Black, accused of LIBOR manipulation, need extra time to prepare their defense.

Former Deutsche Bank traders Matthew Connolly and Gavin Campbell Black have secured additional time to prepare their defense in a LIBOR-rigging case after Judge Colleen McMahon of the New York Southern District Court agreed to adjourn the start date of their trial.

The trial, which was originally scheduled to commence on June 18, 2018, is now postponed until September 2018. On Thursday, May 17, 2018, the Judge said the jury selection will happen on September 5th or September 12th.

The reason for the change is the difference in the allegations made by the Department of Justice (DOJ) in the indictment and the new documents in the case against the traders.

According to the indictment, the defendants were part of a scheme, carried out between 2004 and 2011, to cause Deutsche Bank, their employer-one of the sixteen “Submitter” banks whose estimated borrowing costs were used by the British Bankers’ Association (BBA) to set LIBORs in USD – to submit “false and fraudulent USD LIBOR submissions” to BBA. The Indictment charges that the LIBOR submissions were “false and fraudulent” because they were not “unbiased and honest”.

But the US Government now describes the charged conspiracy differently.

In its latest motion, the Government contends that the defendants made, not one, but two different types of false and misleading statements or representations in furtherance of their conspiracy to obtain money and property from their counterparties by manipulating LIBOR. Neither consists of a false and fraudulent submission made to the BBA (via Thomson Reuters).

Rather, the Government now relies on statements allegedly made (or omitted to be made) directly to the victims of the fraudulent scheme – the counterparties to Deutsche Bank’s trades. The Government argues that “For both categories of false and misleading representations, the defendants and their co-conspirators intended to mislead the counterparties by the statements transmitted to them”.

Under this (new) theory, the materially false representations are not the submissions but rather the representation that the trades would be settled at LIBOR when it was Deutsche Bank’s intention to settle at something the Government calls the “manipulated LIBOR”. The second part of the allegedly false statements is the retransmission of the LIBORs and the underlying submissions into the marketplace, which marketplace included Deutsche Bank’s counterparties.

Neither of these arguments is apparent from the face of the indictment, the Judge has said.

This new theory solves one problem for the Government. It needs to call as witnesses only the alleged recipients of Deutsche Bank’s statements, that is, it does not need to call BBA witnesses. And the Judge has criticized such an approach.

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

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