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* Former Barclays traders to be sentenced this week
* Five now convicted in UK on Libor-rigging charges
* Jury fails to reach verdict on another two defendants
* SFO has 14 days to decide whether to seek their re-trial
* Verdict a victory for SFO after acquittal of brokers (Adds details, background, Barclays no comment)
By Kirstin Ridley and Carolyn Cohn
LONDON, July 4 Reuters) - Three former Barclays traders have been found guilty by a London jury of conspiring tofraudulently manipulate global benchmark interest rates in astark warning to junior bankers and a major victory forBritain's Serious Fraud Office (SFO).
The verdicts bring to five the number of people convicted inLondon for being part of a global financial conspiracy that hasforced banks to pay fines of $9 billion, discredited rates likeLibor and helped shred public faith in the banking industry.
Calcutta-born, U.S.-based Jay Merchant, 45, the most seniorof the men on trial, was convicted unanimously. British formerLibor submitter Jonathan Mathew, 35, and former trader AlexPabon, a 38-year-old American, were found guilty by a majorityverdict after a 10-week trial.
A second Libor submitter, 61-year-old Peter Johnson, hadpleaded guilty in October 2014. The four men are expected to besentenced at London's Southwark Crown Court later this week.
Reporting restrictions on the verdicts were lifted on Mondayafter the jury failed to reach a verdict on two otherdefendants, 44-year-old Greek-born Stylianos Contogoulas andAmerican Ryan Reich, 34. The SFO now has 14 days to decidewhether it will seek a fresh trial for the two .
The verdicts come four years after Barclays became the firstof 11 powerful banks and brokerages to be handed a hefty fineover rate fixing allegations, sparking a political and publicbacklash that forced out charismatic former CEO Bob Diamond, anoverhaul of Libor rules and the criminal inquiry.
SFO SUCCESS
The verdict represented a victory for the SFO, which has hada mixed record on successfully prosecuting white collarcriminals, and whose head David Green has staked his reputationon the costly and high-profile Libor prosecutions.
"The key issue in this case was dishonesty," Green said in astatement.
"The trial in this country of American nationals alsodemonstrates the extent to which the response to Libormanipulation has been international and the subject of extensivecooperation between U.S. and UK authorities."
A spokesman for Barclays declined to comment.
The SFO secured its first Libor conviction when Tom Hayes, aformer UBS and Citigroup trader, became the firstman found guilty by a jury for his role in the Libor scandallast August. He is serving an 11-year jail sentence after hisoriginal 14-year sentence was reduced on appeal.
But the agency suffered a blow when prosecutors failed topersuade a jury that six former brokers conspired with him torig Libor. The brokers were all cleared in January.
SHOCKED REACTION
Merchant, the most senior banker on trial, and juniorbankers Mathew and Pabon denied one count of dishonestly skewingLibor, a benchmark for rates on about $450 trillion of contractsand loans worldwide, to defraud others and make more money forthemselves and Barclays between June 2005 and September 2007.
The men told the court their bosses sanctionedcommunications on Libor rates, that they sent emailed Liborrequests over corporate message systems in full view ofcompliance staff and that such rates commonly reflected banks'derivatives positions at the time.
Mathew, partially deaf since childhood and dyslexic, hunghis head in the dock while his wife wept in the visitor gallery.
Merchant shook his head in disbelief while his elderlyfather looked stunned as a silence fell over the courtroom whilethe verdicts were read out.
Prosecutors said the men plotted with Johnson and others atBarclays to rig Libor, the London interbank offered rate, drivenby greed. Libor was designed to reflect the estimated rate atwhich banks could borrow funds from each other.
New York-based former dollar swaps traders Merchant andPabon sent scores of emails to Libor submitters Johnson andMathew to request Libor rates to suit their trading book.
Pabon, who left Barclays and banking in 2006, said he hadbeen instructed by Merchant to send Libor requests to London. Hesaid he did not think it was wrong and said senior staff did nottolerate dissent and juniors were expected to follow orders.
Mathew, who submitted dollar Libor rates only when Johnsonwas away, told the court he initially lied to investigating U.S.authorities in 2010 about whether he took trader requests intoaccount when choosing the bank's Libor rate because he had beenafraid of Johnson and of losing his job.
(Editing by Keith Weir)
