Two Former Deutsche Bank Employees Indicted in Connection with Long-Running Manipulation of Libor

https://www.justice.gov/opa/pr/two-former-deutsche-bank-employees-indicted-fraud-charges-connection-long-running

Department of Justice
Office of Public Affairs

FOR IMMEDIATE RELEASE
Thursday, June 2, 2016

Two Former Deutsche Bank Employees Indicted on Fraud Charges in Connection with Long-Running Manipulation of Libor

Two former Deutsche Bank AG (Deutsche Bank) traders—the bank’s supervisor of the Pool Trading Desk in New York and a derivatives trader in London—were indicted for their alleged roles in a scheme to manipulate the U.S. Dollar (USD) London InterBank Offered Rate (LIBOR), a benchmark interest rate to which trillions of dollars in interest rate contracts were tied.
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On May 31, a federal grand jury in the Southern District of New York returned a 10-count indictment charging Matthew Connolly, 51, of Basking Ridge, New Jersey, and Gavin Campbell Black, 46, of London, with one count of conspiracy to commit wire fraud and bank fraud and nine counts of wire fraud for their participation in a scheme to manipulate the USD LIBOR rate in a manner that benefited their own or Deutsche Bank’s financial positions in derivatives that were linked to those benchmarks. Connolly was taken into custody today and is expected to make his initial appearance this afternoon. The case has been assigned to Chief U.S. District Judge Colleen McMahon of the Southern District of New York.

Michael Curtler, 43, of London, a former Deutsche Bank derivatives trader and manager of the London Money Market Derivatives (MMD) Desk in London, pleaded guilty in October 2015 to one count of conspiracy to commit wire and bank fraud in connection with his role in the scheme.
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According to the indictment, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the honest and unbiased rates those banks believed they would be charged if borrowing from other banks. LIBOR was published by the British Bankers’ Association, a trade association based in London. The published LIBOR “fix” for USD currency was the result of a calculation based upon submissions from a panel of 16 banks, including Deutsche Bank.

According to allegations in the indictment, Connolly was Deutsche Bank’s director of the Pool Trading Desk in New York, where he supervised traders who traded USD LIBOR-based derivative products. Black was a director on Deutsche Bank’s MMD Desk in London, who also traded USD LIBOR-based derivative products. In order to increase Deutsche Bank’s profits on derivatives contracts tied to the USD LIBOR, Connolly allegedly directed his subordinates, and Black allegedly asked Curtler and others at Deutsche Bank, to submit false and fraudulent LIBOR contributions consistent with the traders’ or the bank’s financial interests rather than the honest and unbiased costs of borrowing.
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