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Two former Deutsche Bank traders convicted in scheme to manipulate global benchmark interest rate

Staff Writer | Thursday October 18, 2018 6:31AM ET
Deutsche Bank
A former supervisor of Deutsche Bank’s Pool Trading Desk and a former derivatives trader were convicted in New York for their participation in a scheme to manipulate the London Interbank Offered Rate (LIBOR), a critical global benchmark tied to trillions of dollars in derivatives, loans, mortgages, and other financial products.<br><br>rnAssistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division; and Special Agent in Charge Matthew J. DeSarno of the FBI’s Washington Field Office’s Criminal Division made the announcement.<br><br>rnFollowing a month long jury trial before the Hon. Chief Judge Colleen McMahon of the U.S. District Court for the Southern District of New York, a jury convicted former Deutsche Bank supervisor Matthew Connolly, 53, of Basking Ridge, New Jersey, of one count of conspiracy and two counts of wire fraud and former derivatives trader Gavin Campbell Black, 48, of London, of one count of conspiracy and one count of wire fraud. A sentencing date has not been set.<br><br>rnAccording to evidence presented at trial, LIBOR is an averaged interest rate, calculated based on submissions from lending banks around the world, reflecting the honest and unbiased rates those banks believed they would be charged if borrowing from other banks.<br><br>rnLIBOR was published by the British Bankers’ Association, a trade association based in London. The published LIBOR “fix” for USD currency was the result of a calculation based upon submissions from a panel of 16 banks, including Deutsche Bank.<br><br>rnConnolly was Deutsche Bank’s director of the Pool Trading Desk in New York, where he supervised traders who traded USD LIBOR-based derivative products.<br><br>rnBlack was a director on Deutsche Bank’s Money Market and Derivatives Desk in London, who also traded USD LIBOR-based derivative products.<br><br>rnIn order to increase Deutsche Bank’s profits on derivatives contracts tied to the USD LIBOR, Connolly directed his subordinates to reach out to Deutsche Bank’s LIBOR submitters to ask them to submit false and fraudulent LIBOR contributions consistent with his traders’ or the banks’ financial interests, rather than the honest and unbiased costs of borrowing, the evidence showed.<br><br>rnThe jury also heard evidence that Black asked Deutsche Bank’s cash traders who were responsible for submitting the bank’s LIBOR rates to ask that they adjust their submissions to favor his derivative trading positions. According to evidence at
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