Traders ‘rigged system’ to boost pay, court told
A GROUP of five traders “gamed the financial system” to rig a vital benchmark interest rate in their favour in a bid to boost their employer’s profits and their own pay and bonuses, a court has heard.
Achim Kraemer, 53, Philippe Moryoussef, 49, Sisse Bohart, 41, Colin Bermingham, 61, and Carlo Palombo, 39, are accused of manipulating the process used to set the Euribor – the euro interbank offered rate – to tweak the rate a few basis points to their advantage.
Kraemer, a trader at Deutsche Bank, and the remaining four defendants who all worked at Barclays, face one count of conspiracy to defraud between January 2005 and December 2009.
Jurors at Southwark Crown Court were told they did not need to consider whether a fraud had taken place, only whether the five defendants in the dock were involved after a sixth defendant pleaded guilty last month.
Deutsche Bank trader Christian Bittar, 46, described by the prosecution as “the main defendant”, pleaded guilty to conspiracy to defraud in March.
Prosecutor James Waddington QC told the jury: “During this case you will learn how a few individuals gamed the system to rip off a lot of people they did business with.
“The performance of these individuals was judged on how much money they made for their employers the banks. They were paid accordingly so traders practiced this fraud in part to boost bonuses around performance.
“There are various reasons for these people behaving the way they did but money was at the heart of it.”
Despite the fact the rate was only shifted a few hundredths of a percentage point, jurors were told that because of the multimillion sums involved in a bank’s day-to-day trading, those involved stood to make or lose vast amounts of money.
Mr Waddington compared the practice to betting on a racehorse or sports team when you know the race or match is fixed, or the Australian cricketers recently caught using sandpaper to change the flight of the ball.
The court heard that Bittar was close friends with Frenchman Moryoussef, who is not in the dock and is being tried in his absence, and that there are dozens of recorded phone calls between the two men boasting about rigging the rate.
Bittar was so successful in his deal making, the court heard, that he earned anything from £3m up to £47m each year in bonuses on top of his £130,000 salary.
Bohart, who worked under the supervision of Bermingham, was part of the cash desk team at Barclays – one of the 48 panel banks submitting estimates of where the Euribor rate should be set.
Mr Waddington said: “The only way in which these traders could make money was making sure that other people lost money. These defendants didn’t concern themselves with other market participants who were unwittingly participating in deals within a rigged system.”
The case continues.