Ex-Rabobank Trader Pleads Guilty in Libor Yen-Rigging Probe

Aug 19, 2014 12:01 am ET

Aug. 19 (Bloomberg) -- A former Rabobank Groep senior trader pleaded guilty in New York to conspiring to manipulate a benchmark interest rate tied to trillions of dollars of securities to benefit his trading positions, the U.S. said.

Paul Robson, who worked at Rabobank’s London office and made the bank’s yen Libor submissions, pleaded guilty to a single conspiracy count in Manhattan federal court yesterday, the Justice Department said in a statement. The ex-trader is scheduled to be sentenced in 2017, the U.S. said.

“Robson and his co-conspirators rigged the markets to ensure that their trades made money,” Assistant Attorney General Leslie Caldwell said in the statement. “The scope of the fraud was massive, but the scheme was simple.”

Investigators in Europe, the U.S. and Asia have been probing allegations that traders at the world’s biggest banks manipulated the London interbank offered rate and similar benchmarks by making false submissions.

The scandal has changed the way the rate is managed and led to billions of dollars in fines. Rabobank, based in Utrecht, Netherlands, agreed to pay a $325 million penalty to resolve a probe by U.S. authorities.

Robson, of the U.K., is among three former Rabobank traders who were charged in January by the U.S. with engaging in a five- year scheme to manipulate yen Libor rates by making false submissions from about May 2006 to January 2011.

June Admission

The other men accused in the case are Paul Thompson of Australia and Tetsuya Motomura of Japan. Takayuki Yagami, a former Japanese yen derivatives trader for the Dutch bank, admitted in June to manipulating the benchmark.

Robson, also known as “Pookie,” will be permitted to return to live in the U.K. and travel abroad after paying a $500,000 bond, including $90,000 in cash, according to the court docket in the case. He’ll be required to check in weekly with the authorities via the Internet.

Robson sometimes referred to the submissions he made on behalf of his co-conspirators as “ridiculously high” and “obscenely high,” and acknowledged they would be out of line with the other submissions from other banks, prosecutors said.

Even small moves in the Libor fix could result in large swings in profit or losses from trades because traders often took large derivative positions, according to the indictment.

Robson’s lawyer, Justin Weddle of Brown Rudnick LLP in New York, didn’t immediately return a call yesterday seeking comment on the plea.

$360 Trillion

The Libor benchmark interest rate is used for more than $360 trillion of securities, including mortgages, credit cards, student loans and other consumer lending products.

The U.S. complaint includes excerpts of e-mails, instant messages and calls exchanged by the three defendants and recorded by the bank.

In one May 10, 2006, exchange, Robson said in an e-mail “it must be pretty embarrassing to set such a low libor. I was very embarrassed to set my 6 mth--but wanted to help thomo” -- what the U.S. says was a reference to Thompson.

In a May 19, 2006, e-mail, Thompson informed Robson that his net exposure for his three-month fixes was 125 billion yen and stated “sneak your 3 m libor down a cheeky 1 or 2 bp” because “it will make a bit of diff for me.” Robson responded that same day stating, “No prob mate I mark it low.”

‘Chunky Fixing’

In an Aug. 4, 2008, exchange, Motomura asked Robson, “Please set today’s 6mth LIBOR at 0.96 I have a chunky fixing.” In an Oct. 30, 2007, phone call that was recorded by the bank, Robson asked Motomura, “Do you want me to set anything for you?” to which Motomura replied that same day, “if it is lower, it’s better for me” asking for a “low 6’s please.”

Robson then caused Rabobank to submit a six-month yen Libor at 0.98 percent, three basis points lower than Rabobank’s submission the day before, moving it from the middle of the panel to the yen Libor panel’s second-lowest, the U.S. said.

The case is U.S. v. Robson, 14-cr-00272, U.S. District Court, Southern District of New York (Manhattan).