There’s a common theme emerging among traders who have been singled out by regulators over the Libor fixing scandal – don’t blame me, blame the system. The latest to emerge into the public eye is Alex Pabon, a former Barclays trader who was convicted of “conspiracy to defraud” in relation to Libor fixing and sentenced to two years and nine months in prison.
“People don’t think about what the culture is at the time and why it was seen as acceptable to do what we did. It was simple. You sent a request for a Libor level. We say ‘we have a position and we want you to consider this position’ to someone at the same bank,” he told Business Insider.
“We work so hard for these [jobs] and we go to school and work hard to get the degrees, we compete hard, and it’s hard to get into these trading positions. The last thing you’re going to do is risk your career for a small amount of money. It doesn’t add up. People just look at one small aspect of this case and not look at the whole picture.”
Pabon said that he was just following orders from his boss to set Libor a certain way.
“Your boss is more experienced and you assume there is a reason [behind the order],” Pabon said to BI. “There is not much room in finance for more questioning of motives. The day after trading, you may have time to question it but there is a hierarchy and you take the orders and execute.”
The Bank of England has consistently said it did not know until much later about Libor rigging and lowballing, but a recording from 2008 contradicts the BOE’s claim, revealing that Barclays had “some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.”
The recording reignited the argument that traders had been instructed by senior managers to keep Libor down at the BOE’s urging. Both Tom Hayes, who got 11 years in prison, and Pabon were not allowed to include this argument in their defence. Hayes said “the real Libor scandal” is that “central banks, politicians and the British Bankers’ Association colluded to get artificially low LIBOR rates.”
Pabon thinks he would have been acquitted if the jury had known about the BOE’s alleged involvement.
In January 2016, former ICAP brokers Colin Goodman, and Danny Wilkinson, ex-brokers from RP Martin Terry Farr and James Gilmour, and Noel Cryan of Tullett Prebon all faced the jury and were found not guilty.
“It has turned our lives upside down,” Cryan said. “Realistically, we should never have been here. We feel we’ve been scapegoated. There are things to be answered but we are not the ones who should be answering them.”
Separately, getting sensitive information from your former colleagues that benefits your current employer seems like a great idea … unless it’s a regulatory violation and until you get caught.
The accounting firm KPMG revealed that an employee who joined the Big Four firm from the Public Company Accounting Oversight Board got confidential info from a PCAOB employee and shared it with colleagues. KPMG said that violated its code of conduct and potentially undermined the integrity of the regulatory process.
After a whistle-blower spoke up, the professional services fired six employees in its audit practice, five of them partners, including Scott Marcello, the head of the United States audit practice, for getting improper warnings ahead of its regulator’s planned audit inspections.
Frank Casal has been appointed vice chairman for audit, taking Marcello’s place, and Jackie Daylor is now national managing partner for audit quality and professional practice, according to the New York Times.
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