Barclays bosses knew about Libor rigging says former trader Jay Merchant

Three senior Barclays executives, including chief operating officer of its investment bank Mike Bagguley, will have to appear in court for a Libor-rigging trial after a former Barclays trader claimed his bosses were aware of the practice.

Jay Merchant, along with former colleagues Stylianos Contogoulas, Jonathan Mathew, Alex Pabon and Ryan Reich, faces one count each of conspiring to defraud by manipulating US dollar-denominated Libor (London Interbank Offered Rate) between June 2005 and September 2007. They are facing a trial at Southwark Crown Court. All of them have denied the charges.

During the trial, the court heard that Merchant had told the UK Serious Fraud Office in March 2014 that manipulation of Euribor, an interbank lending rate linked to the euro, had been "widespread" in London. Giving evidence as a rate-rigging suspect, Merchant also told the SFO that his three senior bosses in Barclays —Bagguley, senior banker Harry Harrison and Eric Bommensath, a former head of global fixed income, currencies and commodities — were all aware of the Euribor manipulation. The three have denied Merchant's allegations but will still have to give evidence in the trial, according to The Guardian.

Merchant in his evidence to the SFO claimed that in late 2005 he had lunch with Bommensath, who instructed him to go out to New York to "teach these practices to make the New York swaps desk more profitable", James Hines, prosecuting counsel for the SFO, was quoted as saying to the court. Bommensath was Barclays's global head of fixed income then but later moved to the US to oversee the New York dollar swaps desk, Hines added.

In 2010, Merchant was interviewed by Barclays's lawyers, when he said after moving to New York, he proposed the idea of "sharing cross-market information" and instructed his colleague Pabon to send requests to London submitters, Hines added, noting that Merchant's 2014 account to the SFO differed from the 2010 evidence.