Barclays Trader Loses Second Bid to Dismiss H-P Fraud Case

(Bloomberg) -- A Barclays Plc foreign exchange trader must face criminal charges he manipulated currency option markets, a judge ruled.

U.S. District Judge Charles R. Breyer in San Francisco rejected for a second time Robert Bogucki’s bid to dismiss claims that he deliberately depressed the volatility, and thus the value, of his client Hewlett-Packard Co.’s options.

The case brought by U.S. prosecutors stems from Hewlett-Packard’s hiring of Barclays as a financial adviser for its 2011 acquisition of Autonomy Corp., which at the time was the U.K.’s second-largest software business. Through the bank, Hewlett-Packard purchased options to buy 6 billion pounds ($7.9 billion) to comply with regulations requiring access to a reserve to complete the transaction. The company has since split into two, HP Inc. and Hewlett Packard Enterprise Co.

Bogucki argued the government’s case hinges on him owing a fiduciary duty to Hewlett-Packard, an obligation, he said in a court filing, that prosecutors "invented out of whole cloth." The complex, risk-shifting transactions between Barclays and Hewlett-Packard "specifically disclaimed" any fiduciary relationship between them, according to the filing.

Breyer disagreed, writing in a four-paragraph order that a conviction for wire fraud "may also be based on affirmative misrepresentations, and the government has properly alleged that Bogucki made misrepresentations to H-P."

The judge added that the liability prosecutors aim to establish for Bogucki’s "misleading half-truths" don’t need to be based on a fiduciary duty.

Sean Hecker, a lawyer for Bogucki, said his client is “innocent, plain and simple.”

“He did not mislead anyone during the competitive, arm’s-length negotiations at issue in this case,” Hecker said in an email. “When all of the facts are known, it will be clear that Mr. Bogucki acted in good faith and with a profound desire to obtain a positive outcome for both his employer and for H-P.”

At a June hearing, Hecker told Breyer that prosecutors investigated and made an agreement with Barclays in which the bank made no admission of wrongdoing. Hecker also told the judge that Barclays agreed to make a “partial disgorgement” of some of the profit it made on the trades at issue.

The case is U.S. v. Bogucki, 18-cr-00021, U.S. District Court for the Northern District of California (San Francisco).

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