NEW YORK (Reuters) -A U.S. appeals court on Thursday threw out the convictions of two former Deutsche Bank AG traders for rigging Libor, once among the world’s most important financial benchmarks, and ordered acquittals for both men.
The 2nd U.S. Circuit Court of Appeals in Manhattan found a lack of evidence that Matthew Connolly and Gavin Black caused Deutsche Bank to make false Libor submissions.
Connolly, from Basking Ridge, New Jersey, had led Deutsche Bank’s pool trading desk in New York, while Black worked on the bank’s money market and derivatives desk in London.
Both were convicted of wire fraud and conspiracy in October 2018.
Connolly was sentenced https://www.reuters.com/article/us-deutsche-bank-libor-crime/ex-deutsche-bank-traders-avoid-prison-time-for-libor-scheme-idUSKBN1X32EH to six months of home confinement and ordered to pay a $100,000 fine, while Black received nine months of home confinement and a $300,000 fine. Federal prosecutors had sought “substantial” prison time for both.
The U.S. Department of Justice did not immediately respond to a request for comment.
“We are elated that Matt Connolly has been fully exonerated in this contrived case,” said Kenneth Breen, a partner at Paul Hastings.
Black’s lawyer Seth Levine, a partner at Levine Lee, was “deeply appreciative” of the outcome. “Mr. Black did his job, as he has lived his life, with honor and honesty,” Levine said.
Before being phased out this month, Libor, or the London interbank offered rate, had underpinned hundreds of trillions of dollars of financial products including credit cards, mortgages and other loans. Libor had once been calculated based on submissions from 16 banks, including Deutsche Bank.
Prosecutors said Connolly directed subordinates to arrange false submissions consistent with his traders’ interests, while Black encouraged false submissions to benefit his own derivative trading. The alleged conspiracy ran from 2004 to 2011.
Libor-rigging investigations resulted in about $9 billion of fines worldwide for banks, including $2.5 billion for Deutsche Bank https://www.reuters.com/article/us-deutschebank-libor-settlement/deutsche-bank-fined-record-2-5-billion-over-rate-rigging-idUSKBN0NE12U20150423 in 2015.
Connolly and Black’s trial was the second in the United States of traders accused of rigging Libor for their own benefit. The convictions in 2015 of two former London-based Rabobank traders were also thrown out https://www.reuters.com/article/uk-rabobank-libor/u-s-appeals-court-voids-libor-convictions-of-ex-rabobank-traders-idUKKBN1A41N9 on appeal.
The case is U.S. v Connolly et al, 2nd U.S. Circuit Court of Appeals, No. 19-3806.
(Reporting by Jonathan Stempel in New YorkEditing by Frances Kerry and Leslie Adler)