More Than a Year in Prison Urged for Ex-Rabobank Libor Rigger

(Bloomberg) -- Former Rabobank Groep trader Paul Thompson deserves at least a year in prison for taking part in the manipulation of the most important interest rate benchmark in the world, U.S. prosecutors said ahead of his sentencing later this month.

Thompson pleaded guilty in federal court in New York in July to charges of conspiracy and fraud related to the manipulation of the London interbank offered rate, becoming the sixth banker from the Dutch lender to be convicted in a global probe of the manipulation of benchmark rates.

Libor is tied to hundreds of trillions of dollars in mortgage loans, consumer debt and other financial instruments. Thompson's crime damaged the credibility of the benchmark and eroded public confidence in the integrity of financial markets, the U.S. said.

In a memo submitted ahead of Thompson's Nov. 9 sentencing, federal prosecutors asked U.S. District Judge Jed Rakoff to sentence him to prison, saying that while he is a "fundamentally decent person" with no criminal history, his participation in the scheme "reveals a selfish worldview."

Thompson, 50, is a devoted family man, who has led a law-abiding life, with the exception of taking part in the Libor-rigging, and shouldn't be imprisoned, his attorneys responded in a letter to Rakoff.

“This conduct was widespread, condoned and well-known throughout the industry,” the attorneys said, adding that he's been punished enough. His family is suffering financially because he's unable to hold a job and unlikely to ever work in his field again, they said.

Escape Consequences

Allowing Thompson to avoid prison would "defeat the objectives of general deterrence and individual accountability by sending the signal that dishonest traders can escape the consequences of their actions merely by pleading guilty in the somewhat unlikely event they are caught," prosecutors said.

The Justice Department has been criticized for negotiating billion-dollar settlements with banks for misconduct without charging individuals, but in the years-long investigation into the rigging of the Libor, U.S. prosecutors have charged more than a dozen bankers while securing several convictions.

“There is no substitute for individual accountability,” prosecutors said.

Thompson faced as long as 30 years in prison for conspiracy to commit wire fraud. Prosecutors said federal guidelines call for a sentence of 33 months to 41 months, while giving Thompson credit for pleading guilty.

Thompson's lawyers said according to their calculations under the federal guidelines, he should be given 12 months to 18 months.

Thompson's offenses are most similar to those of Anthony Conti, who was sentenced to a year in prison, and Jay Merchant, who received 39 months, prosecutors said, noting that neither pleaded guilty. Thompson is "less culpable" than Anthony Allen, the global head of liquidity and finance at Rabobank in London, who got two years, prosecutors said.

In London, the ringleader of a Libor-manipulation scheme, Tom Hayes, a former trader at UBS and Citigroup Inc., was sentenced to 14 years. The sentence was cut to 11 years after an appeal, and Hayes will be eligible for parole after serving half the sentence.

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

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