Judge Colleen McMahon wants more arguments from the Government in order to agree that former Deutsche Bank traders have committed wire fraud.
The United States Government should do more to convince Judge Colleen McMahon of the New York Southern District Court that Matthew Connolly and Gavin Campbell Black, former derivative product traders at Deutsche Bank, have committed wire fraud. In a document, presenting her thoughts on the case, captioned USA v. Connolly (1:16-cr-00370), the Judge outlined the areas where the Government’s argumentation is insufficient and more work needs to be done.
Let’s recall that the Indictment alleges that the ex-Deutsche Bank traders schemed to manipulate LIBOR by making false and fraudulent submissions that were intended to increase the profits (or reduce the losses) owed to Deutsche Bank at the expense of the bank’s counterparties to the derivatives-based contracts. The Government has charged the defendants with use of the wires in connection with a scheme to defraud.
According to the indictment, the defendants were part of a scheme, carried out between 2004 and 2011, to cause Deutsche Bank, their employer-one of the sixteen “Submitter” banks whose estimated borrowing costs were used by the British Bankers’ Association (BBA), a private entity, to set LIBORs in USD – to submit “false and fraudulent USD LIBOR submissions” to BBA. The Indictment charges that the LIBOR submissions were “false and fraudulent” because they were not “unbiased and honest,” in that they took into account considerations other than the true cost for Deutsche Bank to borrow from other banks at some future date certain-most notably, the trading positions of the defendants and their co-conspirators. Assuming that the Deutsche Bank LIBOR submission was factored into any particular LIBOR, this had the potential to “benefit their trading positions” at the expense o f counterparties to those trades.
In the document, filed on Thursday, March 29, 2018, the Judge notes that her thoughts do not represent a ruling on any motion and that they are a series of observations.
