Prospective jurors in LIBOR-rigging case have to explain their debt situation

Maria Nikolova

The DOJ and former Deutsche Bank traders would like to know if the prospective jurors have any debt tied to LIBOR.

As the start of the trial in the LIBOR-manipulation case targeting Matthew Connolly and Gavin Campbell Black, former derivative product traders at Deutsche Bank, gets closer, the parties in the criminal proceedings have to deal with certain formal procedures, including picking jurors.

Documents, filed with the New York Southern District Court on Tuesday, September 4th, indicate that the jurors will face some rather peculiar questions about their financial knowledge and financial situation, in particular about their debt status.

Among the questions that the defendants propose for prospective jurors selection is the following one:

“To the best of your knowledge, have you ever had a loan that had interest rates tied to a benchmark known as LIBOR? If yes, please explain.”

The Government would like to pose a similar question:

“Do any of you have any debt tied to LIBOR? If so, will this affect your ability to be fair and impartial in this case?”

It would be difficult to find a mortgage holder whose debt is not tied to Libor, given that this benchmark rate underpins some $350 trillion of loans. But what is more bizarre is that the jurors are anticipated to have some rather in-depth financial market knowledge about how banks determine the interest rates on their loans. Although a law-compliant bank would include some information about how rates are calculated in an agreement, it remains unclear whether the customer would actually delve deeper into the LIBOR element of his/her deal with a bank.

Furthermore, it appears that jurors would have to know in advance what experts are about to explain during the course of the trial. Thus, for instance, Matthew Connolly has given notice of his intention to present the expert testimony of Matthew A. Evans, whom Mr Connolly offers as an expert in the field of trading data analysis, global financial derivatives markets, trading practices, risk management practices and hedging techniques. Mr Evans is anticipated to explain that Deutsche Bank’s submissions on Relevant Dates were supported by factors that demonstrated the reasonability of each submission on each date.

The Government has also indicated it will use an expert in this case. He is set to provide the jury with a “high-level tutorial on LIBOR and interest-rate derivatives trades that touches only on very basic arithmetic”.

The whole idea of asking jurors questions that imply extensive knowledge about LIBOR and then inviting experts to explain what LIBOR is and how it functions, is the least to say awkward.

The Court and the parties estimate that after a jury is selected, this case may last approximately three weeks. The trial will take place four days per week, Monday to Thursday, from 9:30am to 5:00pm into early October.

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