Two former Rabobank Groep traders convicted of rigging the London interbank offered rate should get lengthy prison terms to reflect the seriousness of their crimes, U.S. prosecutors said.
Allen, a supervisor in London, and Conti, 46, who was the bank’s primary U.S. dollar submitter, are the first to be tried and sentenced in the U.S. for manipulating Libor — a measure tied to more than $350 trillion of loans and securities. Both men were convicted by a Manhattan federal court jury in November for skewing the rate over four years to favor the positions of Rabobank interest-rate swap traders.
“This was one of the most significant financial fraud cases in recent history because it involved a select group of individuals entrusted with setting a number that played such a fundamental and consequential role in the financial system,” wrote Andrew Weissmann, chief of the Justice Department’s Fraud Section. “Allen and Conti treated Libor like a joke and the sentences they receive should reflect the gravity of the betrayal of the trust.”
Allen should get a longer sentence than the 87 to 108 months calculated under federal sentencing guidelines, but less than the 11-year prison term imposed on Tom Hayes, a former trader at UBS and Citigroup Inc. who was convicted in the U.K. of manipulating Libor, the prosecutors said.
Allen, who took the stand in his own defense, showed “a willingness to play fast and loose with the truth when it suits his needs,” the U.S. said.
Conti deserves more than his guideline range of 57 to 71 months, according to the prosecutors. The federal guidelines aren’t binding upon U.S. District Judge Jed Rakoff, who plans to sentence both men on March 10.
Allen and Conti’s crimes caused market-wide losses of more than $600 billion and harmed the credibility of the benchmark, prosecutors said. Victims which were counter-party to the transactions lost more than $1 million, prosecutors said.
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Allen and Conti argued in their pleas for leniency arguing they’d both been punished sufficiently because of the international notoriety of the case. Both men noted that because they aren’t U.S. citizens, they wouldn’t be eligible to serve their terms in the minimum-security facilities where white-collar defendants typically serve their sentences. Conditions in other prisons can be much harsher, they said.
Allen submitted letters from 165 people asking the judge to show leniency. Conti sought to be spared from prison by citing his good character, the need to care for his family and past medical problems.
“Mr. Allen, however, is not Thomas Hayes — not by a wide margin,” his lawyer Michael Schachter wrote. “Mr. Allen did not bribe anyone, nor did he ever accept any bribes. Mr. Allen did not make a nickel from the offending conduct.”
The U.S. has charged 13 people with manipulating Libor, which is used to determine interest rates on mortgages, commercial loans and derivatives. Four pleaded guilty. In the U.K., British prosecutors in August won the first guilty verdict at a Libor-rigging trial with the conviction of Hayes. Six ex-brokers accused of helping Hayes rig Libor were cleared by a U.K. jury in January.
The case is U.S. v. Allen, 14-cr-00272, U.S. District Court, Southern District of New York (Manhattan).
(Updates with defense lawyer’s comment in 11th paragraph.)
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