1 00:00:00,080 --> 00:00:02,640 Speaker 1: In July, a federal appeals court dealta blow to u 2 00:00:02,680 --> 00:00:06,360 Speaker 1: S efforts to prosecute people for allegedly manipulating libor that's 3 00:00:06,400 --> 00:00:08,600 Speaker 1: the interst rate benchmark that's used to value more than 4 00:00:08,640 --> 00:00:13,040 Speaker 1: three trillion dollars in worldwide securities. The panel throughout the 5 00:00:13,039 --> 00:00:16,360 Speaker 1: convictions of two former REBBO bank traders in London, saying 6 00:00:16,400 --> 00:00:20,000 Speaker 1: the saying prosecutors had improperly used testimony that two men 7 00:00:20,079 --> 00:00:23,400 Speaker 1: were forced to give in the UK, But now US 8 00:00:23,440 --> 00:00:27,360 Speaker 1: prosecutors are proving they aren't giving up. On Friday, to 9 00:00:27,640 --> 00:00:32,400 Speaker 1: Paris Bank, bankers at Society General were charged with submitting 10 00:00:32,440 --> 00:00:35,159 Speaker 1: false information about the rates at which that bank was 11 00:00:35,240 --> 00:00:38,920 Speaker 1: able to borrow money. Will these prosecutions fare any better 12 00:00:39,240 --> 00:00:42,200 Speaker 1: than the REBBO bank cases? With us to give some insight, 13 00:00:42,400 --> 00:00:46,400 Speaker 1: is Bloomberg News is New York Courthouse reporter Patricia Hurtado 14 00:00:46,760 --> 00:00:52,519 Speaker 1: joining us from the Federal Court House in Manhattan, Right right, Pat, okay, 15 00:00:52,560 --> 00:00:55,800 Speaker 1: thanks for thanks for joining us on Bloomberg Law. So library, 16 00:00:55,920 --> 00:00:58,760 Speaker 1: this whole issue is is fairly complicated. But before we 17 00:00:58,800 --> 00:01:02,160 Speaker 1: get into the alleged wrongdoing in this case, just tell 18 00:01:02,240 --> 00:01:04,480 Speaker 1: us about the two bankers who were charged. What do 19 00:01:04,520 --> 00:01:07,560 Speaker 1: we know about them. Well, it's an unusual case, um, 20 00:01:07,560 --> 00:01:10,080 Speaker 1: and that this is the first time the US government 21 00:01:10,160 --> 00:01:14,240 Speaker 1: has brought charges against two female bankers. Um. But they're 22 00:01:14,280 --> 00:01:16,800 Speaker 1: basically the allegations are that they engage in the same 23 00:01:16,880 --> 00:01:20,039 Speaker 1: kind of corrupt activity that their male colleagues at other 24 00:01:20,080 --> 00:01:24,959 Speaker 1: banks engaged in. So these women were longtime bank bankers 25 00:01:25,000 --> 00:01:27,560 Speaker 1: at WOD worked their way up. Some one of them 26 00:01:27,640 --> 00:01:32,360 Speaker 1: has been at Suxidetary General for at least fifteen years 27 00:01:32,480 --> 00:01:35,440 Speaker 1: and worked our way up to leading the desk that 28 00:01:35,959 --> 00:01:39,440 Speaker 1: all did all derivatives trading in the world, and her 29 00:01:39,480 --> 00:01:43,520 Speaker 1: subordinate is accused of helping her in this scheme. Now, 30 00:01:43,920 --> 00:01:46,280 Speaker 1: is getting them here going to be a big hurdle? 31 00:01:46,560 --> 00:01:51,200 Speaker 1: France has been reluctant to extradite in general, and particularly 32 00:01:51,200 --> 00:01:55,320 Speaker 1: with respect to a former Society General trader charge with 33 00:01:55,440 --> 00:01:59,960 Speaker 1: benchmark rigging by the UK. Yes, and that's already how 34 00:02:00,040 --> 00:02:03,720 Speaker 1: up in the Paris of Peals Court refused to extradite 35 00:02:04,000 --> 00:02:08,040 Speaker 1: earlier this year a former sock Gen trader who was 36 00:02:08,160 --> 00:02:11,440 Speaker 1: charged with benchmark riggained by the UK, and we wouldn't 37 00:02:11,440 --> 00:02:15,440 Speaker 1: send him there. Um. It's unclear if these women are 38 00:02:15,440 --> 00:02:18,720 Speaker 1: both they're both French citizens, whether France will send them 39 00:02:18,720 --> 00:02:23,400 Speaker 1: to the US. UM there's also there's possibly one avenue 40 00:02:23,480 --> 00:02:25,520 Speaker 1: open to the U S government and that if one 41 00:02:25,560 --> 00:02:28,799 Speaker 1: of them, and it's believed to be the defendant Ms 42 00:02:28,800 --> 00:02:32,359 Speaker 1: cins Andre UH is in the in London that the 43 00:02:32,480 --> 00:02:35,760 Speaker 1: UK might be more willing to turn over a non 44 00:02:36,160 --> 00:02:39,720 Speaker 1: UK citizen to the US for prosecution, but that remains 45 00:02:39,760 --> 00:02:42,760 Speaker 1: to be seen. So tell us a little more about 46 00:02:43,160 --> 00:02:47,560 Speaker 1: the allegations and in particular what what was their supposed 47 00:02:47,720 --> 00:02:51,600 Speaker 1: motivation behind what they were accused of doing. UM There 48 00:02:51,960 --> 00:02:55,840 Speaker 1: their allegation are is that every day UH sixteen member 49 00:02:55,880 --> 00:02:59,080 Speaker 1: bank submit a rate submission for what the bank is 50 00:02:59,120 --> 00:03:01,240 Speaker 1: believed to be able to a trade and set UH 51 00:03:01,639 --> 00:03:05,240 Speaker 1: derivatives on and that rate is submitted and then UH 52 00:03:05,680 --> 00:03:08,440 Speaker 1: averages come out. What these women are accused of doing 53 00:03:08,639 --> 00:03:11,320 Speaker 1: is submitting an average that make it look like the 54 00:03:11,360 --> 00:03:14,360 Speaker 1: bank was in a better financial position than it actually was, 55 00:03:14,840 --> 00:03:17,880 Speaker 1: and they a government allegeds. The US government says they 56 00:03:17,880 --> 00:03:21,360 Speaker 1: were doing it to protect their reputational harm that the 57 00:03:21,400 --> 00:03:25,240 Speaker 1: bank would get if the real UH trading rate or 58 00:03:25,800 --> 00:03:29,920 Speaker 1: library rate was really known to its ability to borrow money. 59 00:03:30,000 --> 00:03:33,240 Speaker 1: And later on what the allegations are UM one of 60 00:03:33,280 --> 00:03:39,360 Speaker 1: the defendants allegedly got worried that they were being investigated 61 00:03:39,520 --> 00:03:42,960 Speaker 1: or they might come under scrutiny by regulators, and suggested 62 00:03:43,040 --> 00:03:47,400 Speaker 1: to superiors that they basically submit a truer libor UH 63 00:03:47,760 --> 00:03:52,280 Speaker 1: rate to the Bankers Association and UM. But basically she 64 00:03:52,360 --> 00:03:55,520 Speaker 1: warned them and they ignored her, and she continued the scheme. 65 00:03:56,200 --> 00:04:00,240 Speaker 1: Pat a New York appeals court tossed out convictions two 66 00:04:00,320 --> 00:04:05,240 Speaker 1: former London based Rubbo Bank traders for manipulating the library 67 00:04:05,280 --> 00:04:10,560 Speaker 1: benchmark rate. Assuming that they do get extradited, will that 68 00:04:10,640 --> 00:04:13,720 Speaker 1: ruling affect this case? Um? That was kind of an 69 00:04:13,760 --> 00:04:16,640 Speaker 1: interesting case because the way the it's been explained to 70 00:04:16,640 --> 00:04:18,440 Speaker 1: me and the way it kind of came out at 71 00:04:18,440 --> 00:04:21,640 Speaker 1: the trial of the Rabbo Bank cases. UM. The government, 72 00:04:21,720 --> 00:04:25,640 Speaker 1: the US government did an investigation into library rigging, and 73 00:04:25,680 --> 00:04:28,760 Speaker 1: it was talking it was investigating the effect it had 74 00:04:28,800 --> 00:04:31,520 Speaker 1: on the US market, and some of the library rates 75 00:04:31,560 --> 00:04:34,760 Speaker 1: get effect interest rates as well as like how much 76 00:04:35,120 --> 00:04:38,440 Speaker 1: interest rate you pay on your credit card? See so 77 00:04:38,680 --> 00:04:41,440 Speaker 1: UM what the The argument was that the UK and 78 00:04:41,520 --> 00:04:46,160 Speaker 1: the US had competing investigations and the UK had um 79 00:04:46,160 --> 00:04:49,840 Speaker 1: compelled some of the descendants to give testimony against their 80 00:04:49,839 --> 00:04:54,000 Speaker 1: will and the argument was that the witness, one of 81 00:04:54,040 --> 00:04:57,080 Speaker 1: the key witnesses in the US case, read this compelled 82 00:04:57,120 --> 00:05:01,039 Speaker 1: testimony and was painted um. In this case, apparently the 83 00:05:01,080 --> 00:05:04,280 Speaker 1: government doesn't have that problem because this is just a 84 00:05:04,400 --> 00:05:09,640 Speaker 1: solo US investigation, So there's no other component invested, parallel 85 00:05:09,680 --> 00:05:13,919 Speaker 1: investigation carried out by any other kind of regulatory agency. 86 00:05:14,160 --> 00:05:19,240 Speaker 1: So Pat, let me ask you this question, is if 87 00:05:19,279 --> 00:05:21,720 Speaker 1: one of the arguments here is that you know, well 88 00:05:21,760 --> 00:05:24,960 Speaker 1: this this alleged conduct is women are in um is 89 00:05:25,200 --> 00:05:28,120 Speaker 1: uh st sin i can having troubled the name, sing 90 00:05:28,320 --> 00:05:34,400 Speaker 1: Zangra and Biscond were in Paris, and the alleged libor 91 00:05:34,640 --> 00:05:39,960 Speaker 1: is centered in London. What's the US interest in this 92 00:05:40,000 --> 00:05:43,839 Speaker 1: whole matter? Why are US prosecutors involved in the first place. Well, 93 00:05:43,839 --> 00:05:47,480 Speaker 1: the U s Government says that if this library rate 94 00:05:47,680 --> 00:05:50,560 Speaker 1: is rigged, even if it's rigged in Europe, it affects 95 00:05:50,600 --> 00:05:54,960 Speaker 1: transactions all across the world, and it infects a three 96 00:05:55,040 --> 00:05:59,440 Speaker 1: hundred and fifty trillion dollar market. And the US government 97 00:05:59,480 --> 00:06:02,479 Speaker 1: specific he says, as a result of the libor rate 98 00:06:02,560 --> 00:06:06,440 Speaker 1: getting rigged by these women, UM allegedly being rigged by 99 00:06:06,480 --> 00:06:10,839 Speaker 1: these women, it affected UM financial products UM that were 100 00:06:10,839 --> 00:06:14,920 Speaker 1: eurodollar futures, and one of those uh that bases their 101 00:06:15,040 --> 00:06:18,520 Speaker 1: rate on the euro dollar future is UM traded on 102 00:06:18,600 --> 00:06:23,160 Speaker 1: the Chicago Mercantile Exchange. So the allegation is at harm's 103 00:06:23,240 --> 00:06:26,320 Speaker 1: US markets, and it could eventually affect how much money 104 00:06:26,320 --> 00:06:28,240 Speaker 1: you pay on an interest rate on your credit card 105 00:06:28,360 --> 00:06:30,880 Speaker 1: bill every or how much you pay on a student loan. 106 00:06:31,480 --> 00:06:35,120 Speaker 1: Pat These cases seem to indicate how difficult it is 107 00:06:35,200 --> 00:06:40,200 Speaker 1: to have cross border prosecutions with the different rules involved 108 00:06:40,320 --> 00:06:45,039 Speaker 1: in the reluctance of some countries to hand their citizens over. Yeah, 109 00:06:45,160 --> 00:06:48,360 Speaker 1: I mean, it's it seems like, uh this since this 110 00:06:48,440 --> 00:06:53,360 Speaker 1: case got announced literally, you know, a week after the ruling, 111 00:06:53,520 --> 00:06:56,880 Speaker 1: in the weeks after the ruling and the appeals court 112 00:06:57,320 --> 00:07:00,000 Speaker 1: setting aside the Rabbit Bank conviction, it seems to show 113 00:07:00,120 --> 00:07:03,159 Speaker 1: that the US government is kind of pushing forward with 114 00:07:03,200 --> 00:07:05,640 Speaker 1: a resolve to sort of try to get at least 115 00:07:06,000 --> 00:07:11,560 Speaker 1: bring prosecutions. Whether this is to put pressure on the bank, UH, 116 00:07:11,640 --> 00:07:15,880 Speaker 1: to the society to general to cooperate with US authorities 117 00:07:16,000 --> 00:07:19,720 Speaker 1: or regulators or adhere to more stringent rules and to 118 00:07:19,800 --> 00:07:23,840 Speaker 1: avoid rule breakers. Um, it's unclear, but the US shows 119 00:07:23,920 --> 00:07:26,960 Speaker 1: resolved that they're not giving up yet. Only about thirty 120 00:07:26,960 --> 00:07:29,000 Speaker 1: seconds left. What have you heard from Skjen And what 121 00:07:29,040 --> 00:07:31,800 Speaker 1: have you heard from lawyers for the two women? Um, 122 00:07:31,800 --> 00:07:34,880 Speaker 1: it's unclear who their lawyers are, so that remains a mystery. 123 00:07:35,080 --> 00:07:38,120 Speaker 1: And uh, they're out of the arms reach of the 124 00:07:38,240 --> 00:07:41,640 Speaker 1: U S Government federal prosecutors. So and the and the 125 00:07:41,680 --> 00:07:44,360 Speaker 1: bank says it's cooperating with the U S. Authorities. And 126 00:07:44,400 --> 00:07:47,040 Speaker 1: the bank has avoided having to pay anything as if 127 00:07:47,120 --> 00:07:49,920 Speaker 1: yet but only been fined by the European Commission for 128 00:07:50,000 --> 00:07:53,960 Speaker 1: Benchmark Rigging. Okay, we're gonna have to leave it there 129 00:07:54,000 --> 00:07:57,800 Speaker 1: are thanks to Pat her Tatto, which her Tatto Bloomberg 130 00:07:57,800 --> 00:08:02,960 Speaker 1: News Courthouse reporter talking about these new charges involving library rigging.