Former Barclays trader draws scrutiny in ongoing Libor investigation
A 30-year-old former Barclays trader is now at the center of the deepening scandal over the manipulation of global benchmark interest rates.
U.S. prosecutors are looking into the activities of Ryan Reich, 30, who worked at the bank between August 2006 and March 2010, according to multiple people familiar with the situation.
Reich, who currently works as a portfolio manager at New York-based hedge fund WCG Management, was fired from Barclays in 2010 for allegedly sending inappropriate emails seeking internal bank information, according to two sources familiar with the situation.
Under scrutiny: a 30-year-old former Barclays trader is now at the center of the Libor probe
Libor, the London interbank offered rate, is used to set rates on trillions of dollars of contracts for everything from home mortgages to credit cards.
Federal prosecutors continue to reach out to individuals to see if they will cooperate or take pleas, according to lawyers with knowledge of the situation.
The lawyers said prosecutors are expected to begin making decisions on charging individuals late this month or in early September.
The ongoing investigation has involved banks on both sides of the Atlantic and involves yen, euro and dollar rates.
Many of the traders under scrutiny do not believe they did anything wrong because their employers and regulators had some awareness of their activities, the lawyers said also.
One person familiar with the situation, said that Reich was directed by his supervisors to send the emails and they were aware of everything he was doing.
The practice of sending emails to gather information on future Libor pricing was ‘systemic at Barclays’ one person with knowledge of the situation said.
At the center of the probe: many former traders believe they didn’t do anything wrong, because their superiors knew what they were doing, lawyers have said
Reich, a Princeton University grad, joined Barclays two years after graduating college and was part of a low-profile New York trading desk at the bank.
Reich filed an employment arbitration case against Barclays following his dismissal in 2010. The case was eventually resolved, though terms were not disclosed.
In the United States, federal authorities and regulators are focusing on the activities of the Barclays desk on which Reich worked. It traded U.S. Treasury and U.S. dollar and Canadian dollar interest rate swaps, a type of derivative contract.
Scheming allegations: federal authorities are investigating if employees from different banks worked together to manipulate the Libor rate
In June, Barclays paid a $453million penalty to authorities in the United States and the United Kingdom to settle allegations that some of its traders schemed with people at other banks to manipulate Libor.
Information released by the New York Fed shows that bank regulators in the United States and Europe knew some banks were submitting low Libor bids during the financial crisis to make institutions appear healthier than they were.
One thing authorities are looking into is whether traders at banks were trying to get information ahead of time to know where Libor was going to be set for the next day, or work with other traders to influence the rate.
Traders at JPMorgan Chase & Co also had dealings with some of the Barclays traders under scrutiny, according to a person familiar with the investigation. JPMorgan declined to comment.
Another lawyer familiar with the investigation said prosecutors could charge traders with wire fraud. This charge does not mean that the bankers succeeded at manipulating Libor, but merely that they had the intention to do so. Wire fraud is often used when individuals communicate through emails or cell phones as part of a conspiracy charge.