Two former Barclays bankers were sentenced on Monday to a total of nine years in jail after they were convicted by a London jury of conspiring to rig the Euribor global interest rate benchmark.
Colin Bermingham, 62, a British former cash market expert and senior rate submitter, was sentenced to five years while Anglo-Italian Carlo Palombo, a 40-year-old former derivatives trader, received a four-year term.A “devastated” Palombo and his family needed time to come to terms with the decision while considering any appeal, his lawyer John Hartley, of Hodge Jones & Allen, said in an email, while Bermingham’s legal team had no immediate comment.
Bermingham and Palombo had both denied any wrongdoing.
Sisse Bohart, a Danish junior Barclays trader and submitter, 41, was acquitted last week. The three had faced a re-trial after a previous jury was last year unable to reach a verdict.
The men were convicted by a jury at Southwark Crown Court in the sixth rate-rigging prosecution brought by the UK Serious Fraud Office (SFO) after a near seven year criminal investigation. It is the second re-trial after a hung jury, underlining the tricky nature of the financial fraud cases.
Prosecutors alleged the defendants conspired to defraud by dishonestly manipulating Euribor (the euro interbank offered rate) – a benchmark that helps determine rates on an estimated $150 trillion to $180 trillion of financial contracts and loans worldwide – between January 2005 and December 2009.
Eleven banks and brokerages have been fined a total of $9 billion to settle rate-rigging allegations in a global investigation. Barclays paid a $453 million penalty in 2012, sparking a backlash that forced out former CEO Bob Diamond, the British fraud inquiry and an overhaul of rate-setting rules.
The sentences are a welcome fillip for the SFO, which has prosecuted five men and one woman over Euribor rigging to date and secured four convictions, including former Deutsche Bank star trader Christian Bittar and one-time Barclays trader Phillipe Moryoussef in 2018.
“These men deliberately undermined the integrity of the financial system to line their pockets and advance the interests of their employers,” said Lisa Osofsky, the head of the SFO.
“We are committed to tracking down and bringing to justice those who defraud others and abuse the system.”
Bittar, one of the world’s best-paid traders who earned more than 57 million pounds ($74 million) over the indictment period, was sentenced to five years and four months after pleading guilty.
Moryoussef, tried in absentia after fleeing to France when Bittar’s plea was made public, was handed an eight-year term. He remains in France.
Prosecutors said that traders cheated counterparties by requesting rates from colleagues that would benefit their trading positions – and that submitters then entered false or misleading numbers by nudging them up or down accordingly.
Brussels-based Euribor, like its Libor (London interbank offered rate) counterpart, is designed to reflect the cost of borrowing between banks and is set after submitters at a panel of major banks report their estimated costs of borrowing over various periods to an administrator, who calculates an average.
Palombo, who joined the bank in his early twenties, said he had been trained by Moryoussef and had thought it “perfectly legitimate practice” to ask submitters for preferential rates until Barclays banned the practice in 2009 as a U.S. inquiry into rate-rigging allegations gathered steam.
Bermingham, who joined Barclays at 18, said he did not believe he had ever submitted a rate that was not justified by real flows of cash in the money market. He said he had not known that Moryoussef sometimes made rate requests on Bittar’s behalf but would have reported this, because Deutsche Bank was a rival.
Nine men have been convicted and 10 acquitted in London over rate-rigging to date. The SFO says other lines of enquiry in the investigation remain open.