Barclays traders appear in court over alleged Libor fixing

Three ex-traders from banking group Barclays appeared in a London court today as Britain began criminal proceedings against US-based Libor traders, part of a global investigation into alleged rigging of benchmark interest rates.

Britain's Serious Fraud Office (SFO) alleges that Jay Merchant (43), a director of dollar fixed-income swaps, and interest-rate derivative traders Alex Pabon and Ryan Reich, aged 35 and 32 respectively, conspired together and with others to defraud between June 2005 and September 2007.

The men, who spoke only to confirm their names and dates of birth, allegedly conspired with three London-based former Barclays employees, who have already been charged by the SFO, as well as other Barclays employees to manipulate rates to improve their own or their colleagues’ trading positions.

British and US prosecutors have charged 16 individuals to date in connection with the investigation into alleged rigging of benchmarks such as Libor (or London interbank offered rate), against which around $450 trillion of financial contracts from derivatives to credit card loans are priced worldwide.

US and European regulators have meanwhile fined 10 banks and brokerages - including JPMorgan, UBS, Deutsche Bank, Royal Bank of Scotland and ICAP - more than $6 billion to settle allegations. Merchant, Pabon and Reich each face one count of conspiracy to defraud, an offence which usually carries a maximum jail sentence of 10 years in Britain. They were ordered to appear before a higher Crown Court on Thursday.

Lawyers for Reich and Merchant have said their clients deny allegations of wrongdoing. Pabon's lawyer declined comment. Merchant, Pabon and Reich voluntarily attended London's Westminster Magistrates' Court without the need for the SFO to start extradition proceedings and have been allowed to remain resident in the United States under their bail conditions.

But they each have to pay a £50,000 security to the court, which they will forfeit if they fail to appear for hearings. The next hearing has been scheduled at London’s Southwark Crown Court.

Reuters