WEBVTT - Libor Traders Acquitted in London Court (Audio)

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<v Speaker 1>Two former Berkley's traders have been acquitted of manipulating the

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<v Speaker 1>library interest rate benchmark. It was the second trial for

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<v Speaker 1>Greek national Stiliano's Contagulas and American Ryan Reich. The jury

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<v Speaker 1>couldn't reach a verdict the first time, although three colleagues

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<v Speaker 1>were convicted and another pleaded guilty. It's the latest development

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<v Speaker 1>in a global investigation that has cost firms about nine

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<v Speaker 1>billion dollars in fines. To talk about the investigation and

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<v Speaker 1>the latest verdict, we have Cornelius Hurley, professor at Boston

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<v Speaker 1>University Law School. Welcome, thanks for joining us. Um. You

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<v Speaker 1>can give us a sense of what went into this

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<v Speaker 1>trial if you would. First of all, what was the

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<v Speaker 1>case against these two men. Well, quite simply, it was

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<v Speaker 1>a case of manipulating libar. And if anybody's interested in

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<v Speaker 1>learning more about this is a new book that just

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<v Speaker 1>came out by David Enrich called The Spider Network UH

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<v Speaker 1>and that he gives all the glory the tales of it. Basically,

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<v Speaker 1>what it is is an old fashioned case of infinite information,

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<v Speaker 1>a symmetry where one side of the trading Florida knew

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<v Speaker 1>what the rates were going to be for live or

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<v Speaker 1>and the rest of the market did not. The critical

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<v Speaker 1>difference here is the information A symmetry is what we

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<v Speaker 1>would today call fake news, because it wasn't just a symmetric,

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<v Speaker 1>it was created. Now, if you happen to be uh

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<v Speaker 1>those poor fellows who were uh in indited and sent

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<v Speaker 1>to prison or the one who pled guilty, um, they

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<v Speaker 1>have to be feeling pretty badly for themselves because the

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<v Speaker 1>one thing that was missing in your setup piece saying

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<v Speaker 1>that Barclay's and these other firms had paid billions of dollars,

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<v Speaker 1>that's absolutely true. What you left out was, however, that

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<v Speaker 1>they had pled guilty to a felony. Can I say

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<v Speaker 1>that again? The institutions themselves pled guilty to a fenalty

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<v Speaker 1>penalty a felony. Um. That's big time bad news, or

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<v Speaker 1>used to be for a bank. But in May of

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<v Speaker 1>twenty fifteen, when these guilty pleads were handed down, relatively

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<v Speaker 1>nothing happened. Most people have even forgotten it. Why because

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<v Speaker 1>the regulators and others put foam on the runway to

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<v Speaker 1>help them get by. This is what was normally anticipated

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<v Speaker 1>to be a tumultuous event. Whenever a financial institution pled

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<v Speaker 1>guilty to a felony, it was well, how is it

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<v Speaker 1>let me ask you this, how was it that that

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<v Speaker 1>these two individuals were not convicted given uh that that

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<v Speaker 1>overhang of their company having pleaded guilty to a felony. Well,

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<v Speaker 1>it was a case of conspiracy and and uh and

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<v Speaker 1>you know Tom Hayes and uh and others as you

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<v Speaker 1>point out, have Apparently the the UK government was just

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<v Speaker 1>not able to prove conspiracy or or alternative. They believed

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<v Speaker 1>the argument that the conspiracy, if it did exist, was

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<v Speaker 1>sanctioned by by their superiors. How much of a setback

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<v Speaker 1>do you see this verdict as being for prosecutors. Well, um,

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<v Speaker 1>let's give a little short little history here. We all

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<v Speaker 1>that know the name Sally Yates. Now any former acting

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<v Speaker 1>attorney general, the former acting Attorney general. Before she was

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<v Speaker 1>famous for being fired by Trump, she was famous for

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<v Speaker 1>something called the Yates Memorandum, which basically said that in

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<v Speaker 1>the context of finding or or enforcing laws against large organizations,

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<v Speaker 1>they're going to look first to see whether there are

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<v Speaker 1>culpable individuals at the senior levels of those organizations. That

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<v Speaker 1>was new policy. See when it was articulated by Sally

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<v Speaker 1>Yates about two years ago. You mentioned just sessions just

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<v Speaker 1>a few moments ago. We wonder whether of the many

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<v Speaker 1>policies that he is repealing under the Obama administration, the

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<v Speaker 1>Yates Memorandum and the policy that goes with it is

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<v Speaker 1>one of them. So, uh, the the answer that's a

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<v Speaker 1>long one. The answer to your question is we we

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<v Speaker 1>shall see what are you looking for next in labrary?

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<v Speaker 1>What's what's sort of the next and what perhaps may

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<v Speaker 1>give us a clue is to to the answer to

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<v Speaker 1>that last question you posed about how the the Sessions

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<v Speaker 1>Justice Department will handle things, Well, it seems the library

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<v Speaker 1>since it was revised and now is Thompson Reuters is

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<v Speaker 1>involved in it. It's it's somewhat different these events, by

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<v Speaker 1>the way it took place, uh, some of them before

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<v Speaker 1>the financial crisis. Um so so ours I'm aware, and

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<v Speaker 1>I'm not in the market every day, but so far

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<v Speaker 1>as I'm aware, libor is functioning today. Here's here's the rub,

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<v Speaker 1>and this is probably a story for tomorrow. We only

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<v Speaker 1>have about thirty seconds, so let's secret seconds. The Trump

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<v Speaker 1>administration has uh signaled that it wants to go back

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<v Speaker 1>to the Glass Stiegel era. Okay, where does libor as

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<v Speaker 1>a as a traditional banking activity fit in the context

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<v Speaker 1>of dividing banking from non banking activities, as the administration

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<v Speaker 1>apparently wants to do well. I want to thank our

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<v Speaker 1>guests talking about this the verdict yesterday or the verdict

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<v Speaker 1>today of two former Berkley's traders quitted of manipulating the

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<v Speaker 1>library interest rate bench Park. That was Cornelius Hurley, Professor

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<v Speaker 1>at Boston University Law School. Thank you so much for

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<v Speaker 1>joining us on Bloomberg Law