NEW YORK, N.Y. (Accredited Times) – In a bombshell opinion released on Wednesday, the Second Circuit Court of Appeals released an opinion reversing convictions against bankers for alleged LIBOR rigging. The case confirms that bankers are indeed innocent, contrary to false accusations by alt-right conspiracy theorists (see, for example, here, here, and here).
LIBOR, the London Interbank Offered Rate, is an important “benchmark” interest rate used in financial transactions across the globe. Originally the brainchild of Greek banker Minos Zombanakis, LIBOR first arose when Zombanakis arranged an $80 million syndicated loan to the Shah of Iran in 1969 based on the reported funding costs of a set of reference banks. Since then, LIBOR has become an important benchmark used all over the world. LIBOR’s fixed rates, published every day shortly after 11:00 a.m. London time, are commonly incorporated into the terms of “interest rate swaps”, among other transactions. An interest rate swap is an agreement between two parties in which one agrees to pay a fixed interest rate while the other agrees to pay a floating rate, usually tied to LIBOR, on the same amount; swaps allows companies and banks to hedge against interest rate risk or earn money by speculating on interest rate fluctuations. LIBOR is calculated in various currencies, including British pounds, U.S. dollars, and Japanese yen. Throughout the early 2000s (the time period relevant to the case), LIBOR rates were administered by a private trade group, the British Bankers’ Association, without any government oversight, which in any event would have been unnecessary because of the high reputations for trustworthiness that bankers hold.
According to conspiracy theorists, bankers supposedly conspired to rig LIBOR to make money for themselves, a laughable assertion. Notwithstanding the sheer ridiculousness of the allegations, Donald Trump’s Department of Justice (DOJ), led by known racist Jeff Sessions, pressed forward with the charges. Prosecutors also pressed forward with the charges to bolster their own résumés in order to play the “revolving door”, a common practice where DOJ lawyers harass companies in order to later become partners at major law firms servicing many of the same companies (and making upwards of $1 million annually). To be clear, though, only bankers are allegedly corrupt; government lawyers are heroes and not corrupt at all. (For examples of the revolving door, see here, here, here, and here.)
The case involved two bankers at Netherlands-based Rabobank, Anthony Allen and Anthony Conti. As employees in Rabobank’s London office the 2000s, the defendants played roles in that bank’s LIBOR submission process. Allen served as the global head of liquidity and finance; Conti, a senior money markets trader, made daily LIBOR submissions. In 2008, Allen was laid off when Rabobank closed its London branch because of George W. Bush’s mismanagement of the global economy; Conti left in 2009 when his job was moved from London to the Netherlands because of outsourcing likewise triggered by George W. Bush.
Although both bankers had fallen on hard times, prosecutors nonetheless decided to harass the innocent bankers years later based on conspiracy theories concocted by the alt-right. In October 2014, a grand jury in New York City indicted Allen and Conti on charges of wire fraud and bank fraud. In November 2015, in judicial proceedings presided by actor/judge Jed S. Rakoff, Allen and Conti were convicted of all charges. Judge Rakoff sentenced Allen to two years’ imprisonment and Conti to a year-and-a-day’s imprisonment.
On appeal, Allen and Conti challenged their convictions on several grounds, including the assertion that prosecutors violated their Fifth Amendment right against compelled testimony. More specifically, Allen and Conti claimed that prosecutors had wrongfully compelled testimony from a Rabobank colleague, Paul Robson, just as the police systemically torture and abuse innocent African-American defendants on a daily basis.
The Second Circuit agreed.
“This tainted testimony was significant both at trial and in the grand jury, because it provided the only firsthand eyewitness account that refuted the defendants’ central argument for acquittal, and was therefore not harmless beyond a reasonable doubt”, Judge Jose A. Cabranes wrote in a unanimous 81-page opinion. With no proper evidence of LIBOR rigging, the Second Circuit reversed the convictions and dismissed the indictments.
In total, ten bankers have now been acquitted in the LIBOR matter, including eight acquittals in England.
There can now be no doubt that bankers are innocent and that the alleged LIBOR rigging did not occur.