(Bloomberg) -- A judge voiced skepticism of a U.S. case against two former Deutsche Bank AG traders charged with rigging the Libor interest-rate benchmark, questioning whether the government will be able to present sufficient evidence to convict the pair.
U.S. prosecutors in New York say former traders Gavin Black and Matthew Connolly provided false Libor submissions to try to rig the benchmark rate underlying trillions of dollars of loans and other financial products. The pair is accused of conspiracy and fraud.
In an unusual filing entitled "Thoughts on the Proof Necessary for Government to Establish Wire Fraud as Charged in This Case,” U.S. District Judge Colleen McMahon on Thursday weighed in with what she called “observations.” Over 21 pages, she said the behavior alleged in the indictment “is nothing less than reprehensible. But this court does not sit to punish reprehensible behavior; it sits to punish behavior that violates some criminal law.”
Defense lawyers have yet to file a dismissal request, but they will. And the defense is certain to reiterate the judge's doubts -- specifically, that the allegedly false statements the defendants made to the British Banking Association were material to market participants, or important enough to affect their investment decisions.
"I have no doubt that anyone in the marketplace would have wanted to know what was afoot,” McMahon wrote. “But that begs the question, which is whether a defendant can be convicted of violating the federal wire fraud statute by the making of false statements” if the statements aren't “material to the person to whom they were made."
Lawyers for Connolly and Black, and a spokesman for federal prosecutors, either declined to comment or didn't return a call.
To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net.
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider
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