US Govt, ex-Deutsche Bank trader disagree over altered documents

Gavin Campbell Black, a former derivative product trader at Deutsche Bank accused of conspiring to manipulate LIBOR, has clashed with the United States Government over evidence that he claims has been altered.

Earlier this month, the defense counsel for one of the former Deutsche Bank traders – Gavin Campbell Black, alerted the Court in connection with materials the Government had provided. These materials are largely comprised of notes of meetings between and among the Government, the FCA and Deutsche Bank.

It turns out that the Government has produced altered versions of at least some of the material, the defines says. It appears that the Government deleted entire portions of text from original documents without making it clear on the face of the document that any alteration was applied. Moreover, the Government has refused to identify which materials it “condensed” or even redacted.

That is why, the defendants request that the Court order the Government to provide a log identifying each document produced to which redactions or alterations have been applied. The defense also requests that the Government be ordered to produce original, unaltered copies of the altered or redacted documents so that it may evaluate the propriety of the Government’s alterations.

In its response, filed with the New York Southern District Court on Tuesday, March 27, 2018, the Government argues that the defendant is not entitled to the Government’s work product. The Government says it is its prerogative to choose how to provide the information.

Further, the Government explains that it took into account the large international investigation of Deutsche Bank—spanning several years and generating a correspondingly large amount (thousands of pages) of attorney and paralegal notes and other work product. That is why, the Government determined that crafting a bullet-point letter was not practical and would delay providing the information to defense. The Government thus isolated the relevant portions of its work product, sometimes by applying redactions and sometimes by condensing the work product, in an effort to provide the information to both Defendants in a timely fashion.

In the end, the Defendants received approximately 700 pages of meeting notes and other work product, which, although substantial, is a fraction of what was reviewed.

The Government insists that the Court should deny the defendants’ motion.

Gavin Campbell Black worked as Director on Deutsche Bank’s Money Market Derivatives and Pool Trading Desks in London from at least in or about February 1997 through at least early 2015. During that period, he traded derivative products that referenced USD LIBOR among other products. Because these trades were settled based on the published USD LIBOR rate, the profitability of Black’s trading positions depended on the direction in which USD LIBORs moved.

Matthew Connolly, the other defendant in the case, worked as the Director of Deutsche Bank’s Pool Trading Desk in New York from at least in or about January 2005 through in or about March 2008.

According to the Indictment, from at least 2005 through at least in or about 2011, Connolly and Black, the defendants, together with other traders, engaged in a scheme to obtain money and property by making false and fraudulent USD LIBOR submissions to the BBA for inclusion in the calculation of USD LIBOR representing that the rates submitted were an unbiased and honest estimate of the bank’s borrowing costs when in fact the submissions reflected rates that were designed to benefit their trading positions.

The scheme had an effect on one or more financial institutions, within the meaning of Title 18, United States Code, Sections 20 and 3293(2). The conduct of the conspirators caused financial institutions to be susceptible to substantial risk of loss and to suffer actual loss. Deutsche Bank conducted a substantial internal investigation, risked sustaining significant harm to its commercial and financial reputation, and agreed to pay approximately $625 million in penalties to the United States Department of Justice as a result of the conduct alleged in this Indictment, and DB Group Services UK Limited, one of its subsidiaries, agreed to pay an additional fine of approximately $150 million.

The case, captioned USA v. Connolly (1:16-cr-00370), continues at the New York Southern District Court.