Britain’s Serious Fraud Office (SFO) said on Friday that it would charge former Deutsche Bank star trader Christian Bittar and nine others in a new phase of a global investigation into alleged benchmark interest rate rigging.
The 10 individuals are to face the first criminal proceedings for alleged manipulation of the Euro interbank offered rate (EURIBOR), part of a global investigation that has already led to big financial institutions being fined billions of US dollars and 22 people being charged.
The traders are all former or current employees of Deutsche Bank AG or Barclays PLC and the SFO said it planned to file further criminal charges in due course.
The nine men and one woman were expected to attend Westminster Magistrates’ Court voluntarily on Jan. 11, where they would be formally charged.
Authorities have been working to lay more charges against those they allege fixed rates such as the London interbank offered rate (LIBOR) and its euro equivalent EURIBOR. The criminal trials that have already taken place have shed light on banker practices before, during and after the 2007-2009 financial crisis.
Designed to estimate the costs at which banks would lend to each other, benchmark rates such as LIBOR and EURIBOR are central cogs in the global financial system and a benchmark for interest rates on an estimated US$450 trillion of financial contracts, from derivatives to student loans.
Those who once worked or still work for Deutsche Bank were named as Bittar, Achim Kraemer, Andreas Hauschild, Joerg Vogt, Ardalan Gharagozlou and Kai-Uwe Kappauf. Former Barclays bankers were named as Colin Bermingham, Carlo Palombo, Philippe Moryoussef and Sisse Bohart. They are to be charged with conspiracy to defraud.
Bermingham, who is known to colleagues as “the professor,” is the only individual currently in Britain. Others are in Singapore, Germany and Denmark, among other places, the SFO said.
The latest arrests come after Tom Hayes, a former UBS AG and Citigroup Inc derivatives trader, became the first person to be convicted by a jury of conspiracy to defraud by manipulating yen-denominated LIBOR. He was sentenced to 14 years in a British jail in August.
In the meantime, six interdealer brokers are currently on trial in London and a fourth trial, that of another group of former Barclays employees, has been scheduled for January in London.
Separately, Barclays is to pay US$120 million to a group of cities and investors that bought LIBOR-based derivatives from the bank, to settle claims it participated in the rigging of LIBOR rate, a lawyer for the purchasers said in a statement.
Barclays is to cooperate with claims against other banks, Michael Hausfeld, a lawyer for the purchasers said.
“The settlement with Barclays, which comes over four years after the case was first filed, not only represents an important breakthrough in resolving this long-running litigation, it also provides significant monetary recovery and cooperation that would benefit the victims of the banks’ conduct,” Hausfeld said in the statement.
Plaintiffs include the city of Baltimore and the City of New Britain Firefighters and Police Benefit fund.
Additional reporting by Bloomberg
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