Second Ex-Barclays Trader Found Guilty of Rigging Euribor

(Bloomberg) -- Ex-Barclays Plc trader Colin Bermingham was convicted of helping to manipulate a benchmark interest rate by a London jury, the ninth conviction secured by U.K. prosecutors in a seven-year probe of rate-rigging.

The jury found Bermingham guilty Thursday in a 10-2 vote following a two-month trial. Two days earlier, the panel found his ex-colleague Carlo Palombo guilty, while another former co-worker, Sisse Bohart, was cleared of manipulating the Euro interbank offered rate.

The verdicts are a boost for the beleaguered U.K. Serious Fraud Office, which has been frequently criticized for mishandling high-profile cases. The Euribor prosecutions were marred early on by multiple defendants refusing to come to the U.K. to face trial and a mistrial regarding the three Barclays traders last year.

But the agency has still managed to rack up a significant number of convictions of prominent bankers. Former UBS Group AG Libor trader Tom Hayes, whose name became synonymous with banker greed, was found guilty in 2015, and another high flier, Deutsche Bank AG’s Christian Bittar, pleaded guilty last year shortly before the first trial of Bermingham, Palombo and Bohart.

"While it has taken a long time to get these cases to court, the outcome highlights how important it is for the SFO to be given the time to consider the evidence and the public interest very carefully," Kathleen Harris, a senior white collar crime lawyer at Arnold & Porter in London, said in an email.

In the most recent case, the trio was charged with fraud related to the manipulation of Euribor, a benchmark tied to trillions of dollars worth of loans and derivatives. The rate is calculated with submissions from lenders who measure the cost of borrowing between each other.

A representative for Bermingham’s lawyers at Slater and Gordon didn’t immediately respond to a request for comment. Bermingham, 62, and Palombo, 40, will be sentenced Monday morning. They face as long as 10 years in prison.

“By manipulating Euribor, these bankers damaged trust in a critical system that supports $180 trillion worth of financial products including personal loans, pension investments and mortgage repayments,” Lisa Osofsky, director of the SFO, said in a statement. “The accuracy of the rate is critical to maintaining the sanctity and trust in our financial system.”

Palombo was an interest-rate swaps trader who relied on the benchmark to make bets. Bohart worked on the bank’s cash desk, which made daily submissions on behalf of Barclays.

The case related to a network of employees at different banks, who worked together to influence Euribor. Along with Bittar’s guilty plea, another former Barclays’ trader, Philippe Moryoussef, was convicted last year for his role in the conspiracy.

Barclays was one of the first banks linked to Libor manipulation in 2012, when it was fined about $450 million in the U.K. and U.S. for submitting false rates. Since then, seven bankers from the lender have been convicted of rigging either Libor or Euribor at a series of trials.

Bermingham was one of the oldest and most experienced people on the trading floor. He’d made submissions for benchmark interest rates for years and read the Euribor code of conduct when it first came out. He maintained that there was often a range of legitimate submissions on a given day. It was fine to take traders’ requests into consideration as long as the bank submitted a rate within that correct range.

During the deliberations, the jury asked the judge to read back a portion of Bermingham’s testimony. In a back and forth with the judge, Bermingham said that he knew that other banks were trying to impact Euribor with their submissions and that it was wrong. For him to alter his submission as well was just evening out the market.

After about an hour of deliberations Thursday morning, the jury sent a note to the judge to say they couldn’t reach a verdict for Bermingham and were unlikely to be able to. Judge Michael Gledhill instructed them to keep working. About two hours later, the jury announced a majority decision to convict.

Bermingham, who remained cool and collected throughout the trial, sat in the defendants’ chamber with his eyes closed tightly and his head pointed down in the moments after the jury announced the verdict. As soon as the proceedings ended he rushed out of the courtroom surrounded by his family and lawyers.

The conviction was "awful news," Tom Hayes’s wife Sarah Tighe said. "He is a great guy and incredibly honest."

To contact the reporters on this story: William Mathis in London at wmathis2@bloomberg.net;Franz Wild in London at fwild@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser

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