(Adds trader's hometown, effort to obtain Justice Department
comment)
By Jonathan Stempel
NEW YORK, Jan 27 (Reuters) - A U.S. appeals court on
Thursday threw out the convictions of two former Deutsche Bank
AG traders for rigging Libor, once among the world's
most important financial benchmarks, and ordered acquittals for
both men.
The 2nd U.S. Circuit Court of Appeals in Manhattan found a
lack of evidence that Matthew Connolly and Gavin Black caused
Deutsche Bank to make false Libor submissions.
Connolly, from Basking Ridge, New Jersey, had led Deutsche
Bank's pool trading desk in New York, while Black worked on the
bank's money market and derivatives desk in London.
Both were convicted of wire fraud and conspiracy in October
2018.
Connolly was sentenced https://www.reuters.com/article/us-deutsche-bank-libor-crime/ex-deutsche-bank-traders-avoid-prison-time-for-libor-scheme-idUSKBN1X32EH
to six months of home confinement and ordered to pay a $100,000
fine, while Black received nine months of home confinement and a
$300,000 fine. Federal prosecutors had sought "substantial"
prison time for both.
The U.S. Department of Justice did not immediately respond
to a request for comment.
"We are elated that Matt Connolly has been fully exonerated
in this contrived case," said Kenneth Breen, a partner at Paul
Hastings.
Black's lawyer Seth Levine, a partner at Levine Lee, was
"deeply appreciative" of the outcome. "Mr. Black did his job, as
he has lived his life, with honor and honesty," Levine said.
Before being phased out this month, Libor, or the London
interbank offered rate, had underpinned hundreds of trillions of
dollars of financial products including credit cards, mortgages
and other loans. Libor had once been calculated based on
submissions from 16 banks, including Deutsche Bank.
Prosecutors said Connolly directed subordinates to arrange
false submissions consistent with his traders' interests, while
Black encouraged false submissions to benefit his own derivative
trading. The alleged conspiracy ran from 2004 to 2011.
Libor-rigging investigations resulted in about $9 billion of
fines worldwide for banks, including $2.5 billion for Deutsche
Bank https://www.reuters.com/article/us-deutschebank-libor-settlement/deutsche-bank-fined-record-2-5-billion-over-rate-rigging-idUSKBN0NE12U20150423
in 2015.
Connolly and Black's trial was the second in the United
States of traders accused of rigging Libor for their own
benefit. The convictions in 2015 of two former London-based
Rabobank traders were also thrown out https://www.reuters.com/article/uk-rabobank-libor/u-s-appeals-court-voids-libor-convictions-of-ex-rabobank-traders-idUKKBN1A41N9
on appeal.
The case is U.S. v Connolly et al, 2nd U.S. Circuit Court of
Appeals, No. 19-3806.
(Reporting by Jonathan Stempel in New York
Editing by Frances Kerry and Leslie Adler)