A U.S. federal appeals court, aka the second circuit, has overturned the conviction of two former Rabobank traders who were sentenced to prison terms two years ago for manipulation of Libor, the leading benchmark for pricing financial transactions.
The court ruled that the trial judge incorrectly relied on compelled testimony, which cannot be used in U.S. criminal cases even when legally compelled by foreign authorities.
After being convicted in the first U.S. trial arising from the global investigation into manipulation of Libor, Anthony Allen, Rabobank’s former global head of liquidity and finance, was sentenced to two years in prison and Anthony Conti, a former senior trader, was sentenced to one year. The verdicts came a year after Rabobank paid $1 billion in fines to resolve related U.S. and European probes.
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The three-judge panel said on Wednesday that the constitutional rights against self-incrimination of the Netherlands-based bank’s former traders had been breached. In the 81-page document, New York’s second circuit court of appeals reversed the judgements of conviction and dismissed the indictment saying that self-incriminating testimony is not allowed under the Fifth Amendment.
The court added that the charges were tainted because the defendants’ compelled testimony in the UK was used against them in the US court.
“In short, compelled testimony cannot be used to secure a conviction in an American court. This is so even when the testimony was compelled by a foreign government in full accordance with its own law,” the panel said.
The verdict marks a defeat for the U.S. Justice Department, which brought charges against the British citizens within its efforts to hold accountable bank executives responsible for this global fraud scheme.