Ex-Barclays traders sentenced to combined nine years in prison in Euribor rigging trial

Two former Barclays traders were sentenced to a combined nine years in prison today after they were found guilty of rigging the Euribor interest rate benchmark.

Sentencing, Judge Gledhill handed Carlo Palombo four years in prison and Colin Bermingham five years for their part in conspiring to manipulate Euribor, the euro currency's money market reference rate and the primary bench mark for short term interest rates.

The Serious Fraud Office (SFO), prosecuting, accused the three defendants of submitting “false and misleading” rates for Euribor to boost their trading positions in a way that prejudiced the economic interests of others.

It accused the defendants of conspiring with former Barclays trader Philippe Moryoussef and former Deutsche Bank star Christian Bittar – whom the SFO described as the “prime movers” of the fraud – between 1 January 2005 and 31 December 2009.

Palombo and Bermingham were found guilty of Euribor rigging last week while a third defendant, Sisse Bohart, was acquitted of the same offence.

Addressing the court, Judge Gledhill said the two defendants acted "contrary to the spirit" to the Euribor code of conduct in submitting figures within a range of rates in order to advantage the trading position of a trader or a bank.

But he acknowledged that neither the definition of Euribor nor the code of conduct gave any "instruction guidance, or assistance" as to how submitters should determine the rates they entered.

"That failure might be thought by an interested observer to be at best foolhardy, if not utterly negligent," he said. "It was an open door for those involved in the conspiracy to manipulate, or attempt to manipulate, the Euribor rate for the advantage of their own bank's trading positions."

He added: "The senior managers should have known what was going on and stopped it. They should have provided proper training in the Euribor rate and setting process."

Sentencing Palombo, who joined Barclays in 2002 aged 23, the judge said the main motive of the crime was "greed", adding that "your inhibitions were suppressed as you thought you would not be found out".

The Judge said there had been no prior evidence of Euribor manipulation at Barclays before Moryoussef joined the bank. "In my view, it is beyond doubt that he instigated the dishonest practice at Barclays. I accept that but for him, you would not have become involved. He told you what to do and you loyally followed his instructions."

He said Palombo's training on Euribor was "modest" and that "management and compliance supervision was at the best inadequate".

But he said it would not have taken Palombo long before he knew that what he was doing under Moryoussef's instruction was illegal and dishonest.

Turning to Bermingham, whom he called "by far the most senior banker in this case" he said his answers in cross examination that he had submitted higher or lower rates because other banks were said to be doing it was "were either an admission of guilty or came remarkably close to an admission".

Judge Gledhill said it was harder to answer why Bermingham had become involved in the conspiracy. "You were well remunerated by Barclays for your work, but you received nothing more for accommodating traders' requests. So there was no personal gain for you. Part of the answer lies in a desire to help Barclays prosper and perhaps it had something to do with a desire of being respected by others."

Speaking after the trial, Palombo's lawyer, John Hartley, said: "Mr Palombo started at Barclays as a junior trader and was taught by his management from an early stage about making requests of the submission desk. He gave evidence during the trial that this was an ordinary course of business at the bank and there was never an issue of any of his actions being dishonest at that time and that he had received no training on Euribor submissions. No senior members of management were on trial.

"This was the latest trial in a series of interest rate manipulation cases brought by the SFO. The last few years have seen mixed results for the prosecutor with a handful of convictions, acquittals and several re-trials following hung juries – perhaps indicative of the complex nature of these cases and the difficulty juries experience in coming to a decision.”