Speaker 1: Two former Berkley's traders have been acquitted of manipulating the
Speaker 1: library interest rate benchmark. It was the second trial for
Speaker 1: Greek national Stiliano's Contagulas and American Ryan Reich. The jury
Speaker 1: couldn't reach a verdict the first time, although three colleagues
Speaker 1: were convicted and another pleaded guilty. It's the latest development
Speaker 1: in a global investigation that has cost firms about nine
Speaker 1: billion dollars in fines. To talk about the investigation and
Speaker 1: the latest verdict, we have Cornelius Hurley, professor at Boston
Speaker 1: University Law School. Welcome, thanks for joining us. Um. You
Speaker 1: can give us a sense of what went into this
Speaker 1: trial if you would. First of all, what was the
Speaker 1: case against these two men. Well, quite simply, it was
Speaker 1: a case of manipulating libar. And if anybody's interested in
Speaker 1: learning more about this is a new book that just
Speaker 1: came out by David Enrich called The Spider Network UH
Speaker 1: and that he gives all the glory the tales of it. Basically,
Speaker 1: what it is is an old fashioned case of infinite information,
Speaker 1: a symmetry where one side of the trading Florida knew
Speaker 1: what the rates were going to be for live or
Speaker 1: and the rest of the market did not. The critical
Speaker 1: difference here is the information A symmetry is what we
Speaker 1: would today call fake news, because it wasn't just a symmetric,
Speaker 1: it was created. Now, if you happen to be uh
Speaker 1: those poor fellows who were uh in indited and sent
Speaker 1: to prison or the one who pled guilty, um, they
Speaker 1: have to be feeling pretty badly for themselves because the
Speaker 1: one thing that was missing in your setup piece saying
Speaker 1: that Barclay's and these other firms had paid billions of dollars,
Speaker 1: that's absolutely true. What you left out was, however, that
Speaker 1: they had pled guilty to a felony. Can I say
Speaker 1: that again? The institutions themselves pled guilty to a fenalty
Speaker 1: penalty a felony. Um. That's big time bad news, or
Speaker 1: used to be for a bank. But in May of
Speaker 1: twenty fifteen, when these guilty pleads were handed down, relatively
Speaker 1: nothing happened. Most people have even forgotten it. Why because
Speaker 1: the regulators and others put foam on the runway to
Speaker 1: help them get by. This is what was normally anticipated
Speaker 1: to be a tumultuous event. Whenever a financial institution pled
Speaker 1: guilty to a felony, it was well, how is it
Speaker 1: let me ask you this, how was it that that
Speaker 1: these two individuals were not convicted given uh that that
Speaker 1: overhang of their company having pleaded guilty to a felony. Well,
Speaker 1: it was a case of conspiracy and and uh and
Speaker 1: you know Tom Hayes and uh and others as you
Speaker 1: point out, have Apparently the the UK government was just
Speaker 1: not able to prove conspiracy or or alternative. They believed
Speaker 1: the argument that the conspiracy, if it did exist, was
Speaker 1: sanctioned by by their superiors. How much of a setback
Speaker 1: do you see this verdict as being for prosecutors. Well, um,
Speaker 1: let's give a little short little history here. We all
Speaker 1: that know the name Sally Yates. Now any former acting
Speaker 1: attorney general, the former acting Attorney general. Before she was
Speaker 1: famous for being fired by Trump, she was famous for
Speaker 1: something called the Yates Memorandum, which basically said that in
Speaker 1: the context of finding or or enforcing laws against large organizations,
Speaker 1: they're going to look first to see whether there are
Speaker 1: culpable individuals at the senior levels of those organizations. That
Speaker 1: was new policy. See when it was articulated by Sally
Speaker 1: Yates about two years ago. You mentioned just sessions just
Speaker 1: a few moments ago. We wonder whether of the many
Speaker 1: policies that he is repealing under the Obama administration, the
Speaker 1: Yates Memorandum and the policy that goes with it is
Speaker 1: one of them. So, uh, the the answer that's a
Speaker 1: long one. The answer to your question is we we
Speaker 1: shall see what are you looking for next in labrary?
Speaker 1: What's what's sort of the next and what perhaps may
Speaker 1: give us a clue is to to the answer to
Speaker 1: that last question you posed about how the the Sessions
Speaker 1: Justice Department will handle things, Well, it seems the library
Speaker 1: since it was revised and now is Thompson Reuters is
Speaker 1: involved in it. It's it's somewhat different these events, by
Speaker 1: the way it took place, uh, some of them before
Speaker 1: the financial crisis. Um so so ours I'm aware, and
Speaker 1: I'm not in the market every day, but so far
Speaker 1: as I'm aware, libor is functioning today. Here's here's the rub,
Speaker 1: and this is probably a story for tomorrow. We only
Speaker 1: have about thirty seconds, so let's secret seconds. The Trump
Speaker 1: administration has uh signaled that it wants to go back
Speaker 1: to the Glass Stiegel era. Okay, where does libor as
Speaker 1: a as a traditional banking activity fit in the context
Speaker 1: of dividing banking from non banking activities, as the administration
Speaker 1: apparently wants to do well. I want to thank our
Speaker 1: guests talking about this the verdict yesterday or the verdict
Speaker 1: today of two former Berkley's traders quitted of manipulating the
Speaker 1: library interest rate bench Park. That was Cornelius Hurley, Professor
Speaker 1: at Boston University Law School. Thank you so much for
Speaker 1: joining us on Bloomberg Law